A firm is in equilibrium when its _________.

marginal cost equals the marginal revenue

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total cost is minimum

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total revenue is maximum

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average revenue and marginal revenue are equal

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Solution

The correct option is A marginal cost equals the marginal revenue
A firm is said to be in equilibrium when its marginal cost is equal to marginal revenue and marginal cost curve cuts the marginal revenue curve from below. A firm inequilibrium enjoys super normal profits if average revenue exceeds marginal cost.

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