Which of the following market situation explains Marginal Cost equal to Price for attaining equilibrium?
Which of the following market situation explains Marginal Cost equal to Price for attaining equilibrium?
The correct option is B Perfect Competition.
Perfect
competition is a type of market where there are huge number of buyers and
sellers who deals in the same type of product due to which no individual unit
is able to influence the price of the product.
So, Marginal revenue or Average Revenue = total sales /
quantity
= Price x quantity/ quantity
= Price
Therefore, under perfect competition Marginal revenue, Average Revenue and the price remains the same
throughout.
In a perfect competition, the firms are able to maximize it's profit when the marginal cost of the
firm is equal to marginal revenue of the firm.
Perfect competition is a type of market where there are huge number of buyers and sellers who deals in the same type of product due to which no individual unit is able to influence the price of the product.
So, Marginal revenue or Average Revenue = total sales / quantity
= Price x quantity/ quantity
= Price
Therefore, under perfect competition Marginal revenue, Average Revenue and the price remains the same throughout.
In a perfect competition, the firms are able to maximize it's profit when the marginal cost of the
firm is equal to marginal revenue of the firm.
