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The marginal costs ( MC ) , average variable costs ( AVC ) , and average total costs ( ATC ) for a firm are

The marginal costs (MC), average variable costs (AVC), and average total costs (ATC) for a firm are shown in the figure below.
Suppose the market is initially in a long-run equilibrium. Then, consumers find out that the product is harmful to one's health. This will cause the
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to
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and will cause the market price to
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. Profit for this firm will
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. As a result, firms will
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the market, which will cause the
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to
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and will cause the market price to
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until the profit for the marginal firm entering or exiting the market is
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.

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