A firm with marginal cost equals to its marginal revenue will produce the equilibrium output if it is in?
Answer Details
A firm with marginal cost equals to its marginal revenue will produce the equilibrium output in a pure competition market. In pure competition, the firms are price takers and have no market power to influence the price. The equilibrium is reached when the market price equals the marginal cost of production. Therefore, the firm maximizes its profit by producing at the level where the marginal cost equals the marginal revenue. In other types of markets, the firm may have market power and can influence the price, thus changing the equilibrium output level.