Final answer:
In the long run, a perfectly competitive firm will charge a price at the minimum point of its average total cost curve. This price allows the firm to cover all costs, including providing a normal return to capital, but leads to zero economic profits due to the entry and exit of firms adjusting the market price to this level.
Step-by-step explanation:
In the context of a perfectly competitive market, a firm will charge a price that aligns with the minimum point of the average total cost (ATC) curve in the long run. This outcome aligns with choice c - at the minimum point of the average total cost curve to cover all costs. In the long run, perfectly competitive firms will make zero economic profits because new firms will enter the market if there are profits, driving the price down to the point where it equals the minimum ATC. If there are losses, firms will exit the market, causing the price to rise until it reaches the break-even point again. The process of entry and exit continues until the market price is such that the remaining firms earn exactly enough revenue to cover all their costs, including a normal profit, but no economic profits.
Furthermore, the point where the marginal cost (MC) curve intersects the ATC at its minimum is known as the 'zero profit point,' which is the situation after all the entry and exit of firms have occurred. At this stage, the firm's price or marginal revenue (MR), which is equal to the market price for a perfectly competitive firm, coincides with both MC and ATC, thereby indicating that the firm is making zero economic profits (normal profits are accounted for in the ATC).