關于ECONOMY,

A price taker produces at Price = Marginal Cost. If the price level is below the average variable cost a price taker who is solely wealth-maximizing will go out of the business. But if the price level is above average variable cost but below average total cost, although the production involves loss, the price taker is better keeping operation so that the earnings above AVC can at least cover part of the fixed cost instead of losing the whole amount of fixed cost altogether.

When there is "profit" (more correct term should be economic rent), in the long run, since there is free entry and exit, more sellers will enter the market. Market supply curve rises, pushing down the price and each firm's "profit" falls. As long as positive "profit" exists, more sellers wil enter and price is further pushed down until the price falls to a level where the marginal firm's "profit" seizes to exist.

2006-11-06 21:29:17 補充：
When there is profit,in long run with free entry, more sellers enter the market. Market supply curve rises, pushing down price and profit falls. As long as positive profit exists, more sellers enter and price is pushed down until the price falls such that marginal firms profit seizes to exist.