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Question : The equilibrium of a firm under perfect competition will be determined when:

Option 1: Marginal Revenue > Average cost

Option 2: Marginal Revenue > Average Revenue

Option 3: Marginal Revenue = Marginal cost

Option 4: Marginal cost > Average cost


Team Careers360 2nd Jan, 2024
Answer (1)
Team Careers360 13th Jan, 2024

Correct Answer: Marginal Revenue = Marginal cost


Solution : The correct option is Marginal revenue = Marginal cost .

In a perfectly competitive market, firms are price takers, meaning they have no control over the market price. They can sell as much as they want at that price. The firm's equilibrium point is where the additional revenue from selling one more unit is exactly equal to the additional cost of producing that unit.

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