Final answer:
In long-run equilibrium, competitive price-searcher markets will price at a level where firms earn zero economic profits, equating price to average cost.
Step-by-step explanation:
When a competitive price-searcher market is in long-run equilibrium, firms will charge a price that is equal to average cost. In this situation, the market dynamics ensure that the firm's total revenue is just sufficient to cover the total costs, which includes both the average variable costs and the average fixed costs. As a result, firms will earn zero economic profits, and no firm has the incentive to enter or leave the market. This outcome happens because any potential short-run profits attract new firms to enter the market, increasing the supply and pushing the price down until profits are eliminated. Conversely, if firms are making losses, some will exit the market, reducing the supply and increasing the price until losses are eliminated. This is why, in the long run, competitive markets self-adjust to the point where the price is equal to the average cost, ensuring firms in the market break even.