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Question
With increasing returns to scale, the equilibrium in a market is incomplete. This is __________.
With increasing returns to scale, the equilibrium in a market is incomplete. This is __________.
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Solution
The correct option is C only in the case of perfectly competitive market
With increasing returns to scale, the equilibrium in a market is incomplete. This is only in the case of perfectly competitive maket.Perfect
competition is a form of the market in which there is a large number of
buyers and sellers and where homogeneous product is sold at a uniform
priceA price taker firm means that it has to accept the price as determined by the forces of market demand and market supply.Firm's demand curve under perfect competition is a horizontal straight line parallel to X-axis.Under perfect competition, AR is constant for a firm. Hence, AR = MR.
With increasing returns to scale, the equilibrium in a market is incomplete. This is only in the case of perfectly competitive maket.Perfect competition is a form of the market in which there is a large number of buyers and sellers and where homogeneous product is sold at a uniform priceA price taker firm means that it has to accept the price as determined by the forces of market demand and market supply.Firm's demand curve under perfect competition is a horizontal straight line parallel to X-axis.Under perfect competition, AR is constant for a firm. Hence, AR = MR.
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