GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A perfectly competitive market in the short run will be in equilibrium where
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MC = Zero
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MC = AC
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MC = MR
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None of these
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Explanation:
Detailed explanation-1: -Firms in a perfectly competitive world earn zero profit in the long-run. While firms can earn accounting profits in the long-run, they cannot earn economic profits.
Detailed explanation-2: -Summary of Short-run Equilibrium in Monopoly In the short-run, a monopolist firm cannot vary all its factors of production as its cost curves are similar to a firm operating in perfect competition. Also, in the short-run, a monopolist might incur losses but will shut down only if the losses exceed its fixed costs.
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