equilibrium under perfect competition requires that

Assessment: WAEC SSCE - Economics - 2008 (Objective) Subject: Economics

Question 1 Report

equilibrium under perfect competition requires that
Answer Details
Equilibrium under perfect competition requires that MR (Marginal Revenue) = MC (Marginal Cost) = AR (Average Revenue) = AC (Average Cost). In simpler terms, a firm operating in a perfectly competitive market will produce where the price (which equals AR) is equal to the marginal cost of producing the last unit (MC). At this point, the firm will be maximizing its profit. If the price is higher or lower than this point, the firm will not be maximizing its profit.
Read lesson note on The Theory Of Production (JAMB)
Read lesson note on The Theory Of Price Determination (JAMB)
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