In a small rural town, there is a vibrant agricultural market where numerous local farmers gather to sell their fresh produce. Each farmer grows the same type of organic tomatoes. The tomatoes are identical in quality, size, and taste. Buyers have access to information about the market, including the current market price for tomatoes. Which of the following statement/s is/are correct? In the long run equilibrium in a perfectly competitive market, local farmers are operating at i. the minimum of their average variable curve. ii. zero economic profit. iii. the intersection of the marginal cost and average total cost curves. iv. supernormal profits. a) Only i, ii, ii, iv b) Only i and iv c) Only iii d) Only ii QUESTION
Answer In a perfectly competitive market, the statement that is correct in the long-run equilibrium is that local farmers are operating at the intersection of the marginal cost and average total cost curves (iii). This is because in the long-run,