The correct option that defines the condition at which
Answer to Problem 1MCQ
Option d is correct.
Explanation of Solution
Explanation for correct option:
d.
When marginal cost is equal to the marginal revenue then the total cost of production is minimum in a perfect competition. At this condition the perfectly competitive firm will earn maximum profit. Therefore, option d is correct
Explanation for incorrect options:
a.
When price or marginal revenue is equal to the marginal cost then only firm can maximize its profit. The firm can earn normal profit in long run. Therefore, option a is incorrect.
b.
Average revenue will decrease if marginal cost is increased. Marginal revenue and marginal cost should equate to earn maximum profit. Therefore, option b is incorrect.
c.
If marginal revenue is equal to total cost then firm will not earn even normal profit. Therefore, option c is also incorrect.
e.
If
Perfect Competition: In perfect competition, firms are the price takers where
Chapter 58 Solutions
Krugman's Economics For The Ap® Course
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