The minimum feasible longrun average cost for firms in a per

The minimum feasible long-run average cost for firms in a perfectly competitive industry is $40 per unit. If every firm in the industry currently is producing an output consistent with a long-run equilibrium, what is the marginal cost incurred by each firm? What is the market price?

Solution

Profits are maximized for the perfectly competitive firm when the firm produces the quantity where

P = MC.

Total revenue exceeds total cost by the greatest amount.

MC=MR.

And market price will be $40 per unit.