Answer
Long run
Work Step by Step
In the short run, the price might be greater than the average total cost. If this is true, then the firm is making a profit. (If the price is less than the average total cost, then the firm is losing money.)
In the long run, if firms are making money, then more firms will enter the market. However, if firms are losing money, then firms will leave the market. Eventually, the price will be the average total cost (due to firms entering and/or exiting the market).
