Condition for equilibrium of firm under perfect competition:

CA Foundation · Business Economics · PYQS · September 2024
Condition for equilibrium of firm under perfect competition:
(A) A. Where Average Revenue (AR) is equal to the Average Cost (AC).
(B) B. Where Marginal Revenue (MR) is equal to the Marginal Cost (MC).
(C) C. MC curve cuts MR curve from below.
(D) D. Where MR = MC and also MC curve cuts MR curve from below.

Suggested Answer and Working Notes:

Correct Answer: Option (D)

D. Where MR = MC and also MC curve cuts MR curve from below.

Topics: Price Determination in Different Markets, Theory of Production and Cost

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