Final answer:
In a market situation where a single firm produces a product, costs are minimized in the long run when the firm operates in a perfectly competitive market. The firm will produce at the quantity where its marginal cost equals the price of the product. By producing at this quantity, the firm is minimizing its average total cost and maximizing its profits.
Step-by-step explanation:
In a market situation where a single firm produces a product, costs are minimized in the long run when the firm operates in a perfectly competitive market. In a perfectly competitive market, there are many buyers and sellers, and firms are price takers.
The firm will produce at the quantity where its marginal cost equals the price of the product. This is because in a perfectly competitive market, a firm's price is determined by the market and it has no control over the price.
By producing at the quantity where marginal cost equals price, the firm is minimizing its average total cost and maximizing its profits.