McqMate
| Q. |
The equilibrium of a firm under perfect competition will be determined when - |
| A. | Marginal Revenue > Average Cost |
| B. | Marginal Revenue > Average Revenue |
| C. | Marginal Revenue = Marginal Cost |
| D. | Marginal Cost > Average Cost |
| Answer» C. Marginal Revenue = Marginal Cost | |
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Explanation: 173. (3) When the marginal revenue productivity of a factor is equal to the marginal- cost (MR=MC) of the factor, the firm will be in equilibrium and its profits maxmized. Equilibrium in perfect competition is the point where market demands will be equal to market supply. The condition that price equals both average revenue and marginal revenue (P = AR = MR) is the standard condition for a perfectly competitive firm. |
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