According to the textbooks,in a long run equilibrium, the market price will be equal to the minimum point of firm's ATC curve. But every firm's ATC curve will differ i.e each one of them will have different cost structure. In such scenario, how do we identify the representative firm?

  • $\begingroup$ There is variable on the costs structure, market segmentation, price segmentations, product segmentations, etc. $\endgroup$ – mootmoot Jun 8 '17 at 13:20
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    $\begingroup$ In a perfectly competitive market, firms will act as price takers and at equilibrium there will be only one price. Further, the product will be homogeneous in a perfectly competitive market. I can only imagine of one situation where every firm's ATC curve in long run equilibrium will exactly be the same. Is that correct? $\endgroup$ – P. Singh Jun 8 '17 at 17:31
  • $\begingroup$ What you describe is NOT "perfectly competitive market", it is a context. You can choose market capital, profits margin, etc. The problem of "perfect" ATC is difficult to apply to the real-world scenario, as technology breakthrough, sometimes it can mean a total product phase out. $\endgroup$ – mootmoot Jun 9 '17 at 8:16

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