GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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AC = AR
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TC = TR
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MC = AC
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MR = MC
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Detailed explanation-1: -A firm can attain equilibrium based on 2 conditions: Its MC =MR. MC cuts MR from below at equilibrium level of output.
Detailed explanation-2: -In the perfect competition market the must be fulfilled for an industry to be in equilibrium they are: Quantity demand equal to Quantity supply i.e. (QD = QS) Marginal cost (MC) Equal to Marginal Revenue (MR) e. (MC = MR) and Marginal cost (MC) cuts Marginal Revenue (MR) from below.
Detailed explanation-3: -Equilibrium in perfect competition is the point where market demands will be equal to market supply. A firm’s price will be determined at this point. In the short run, equilibrium will be affected by demand. In the long run, both demand and supply of a product will affect the equilibrium in perfect competition.
Detailed explanation-4: -As long as the revenue of producing another unit of output (MR) is greater than the cost of producing that unit of output (MC), the firm will increase its profit by using more variable input to produce more output.