GK
BUSINESS ECONOMICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Two conditions are required to be there for the equilibrium under monopoly. These are
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MC = AR and MC cuts the MR from below
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MC = MR and MR cuts the MC from below
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MR = MC and MC cuts the MR from below
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MR = MC and MC cuts the MR from above
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Explanation:
Detailed explanation-1: -The Equilibrium level in monopoly is that level of output in which marginal revenue equals marginal cost. The producer will continue producer as long as marginal revenue exceeds the marginal cost. At the point where MR is equal to MC the profit will be maximum and beyond this point the producer will stop producing.
Detailed explanation-2: -Short-run equilibrium of the company under monopolistic competition. The company maximises its profits and produces a quantity where the company’s marginal revenue (MR) is equal to its marginal cost (MC). The company is able to collect a price based on the average revenue (AR) curve.
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