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Long run equilibrium in perfect competition?

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    Ok, I understand that abnormal profits, or losses, won't be sustained in the long run in a PC market.

    In the long run the MC curve will cross the optimum point of the ATC curve as well as the MR line at the same time so AR=AC and profits are 'normal'.

    What I don't understand is, is this the optimum point of the LRAC curve, or just of the ATC curve, which resides at a particular point (above the MES) on the LRAC?

    Because my notes from my teacher say it's the 'long run cost curve' but it wouldn't make sense if it was the lowest point of the LRAC (the MES) as one firm cannot produce up to that level in PC surely?

    I'm also confused over whether there can be both a separate industry and a firm's LRAC?

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Updated: March 30, 2012
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