00:01
So what price will a perfectly competitive firm end up charging in the long run? well, in the long run, the firm's going to charge the price that is going to be at the bottom of the average total cost curve.
00:18
That's at this point here.
00:21
Why is that? well, that is because if the market has profits, then more suppliers are going to come into this market, trying to take advantage of it.
00:33
So the increase in supply, as we know from before, is going to decrease the price.
00:39
A decrease in price will lead to a decrease in profits as long as our production costs have remained the same.
00:49
So the profits are going to keep lowering until they hit zero.
00:53
And we know that at zero, profits are zero whenever the price is equal to the average total cost.
00:59
And again, that's this point here...