Detail

As we know, in long-run equilibrium in perfect competition individual firms will earn zero profit. This means that the market price and ATC must be exactly equal where P = MC. All this can only occur at the minimum of the ATC curve where price is 14 and output is 7, as shown below.

15. When the industry is in long run equilibrium the firm shown in Figure 3 will:

produce an output of 10 units at a price of $20. This can't be correct for several reasons. First, we saw that at a price of $20 8, not 10, is the correct level of output. Second, we saw that at a price of $20 the firm is earning profit; therefore, the industry can't be in long run equilibrium.
produce an output of 5 units at a price of $10. At a price of $10 the firm would produce more than 5 units but profit would be negative, so this too can't be a long run equilibrium.
produce an output of 8 units at a price of $15. At a price of $15 the firm would produce 7 and a fraction more units and would have a positive profit.
produce an output of 7 units at a price of $14.
produce an output of 12 units at a price of $20. This can't be correct for several reasons. First, we saw that at a price of $20 8, not 12, is the correct level of output. Second, we saw that at a price of $20 the firm is earning profit, so the industry can't be in long run equilibrium.