Behavior and Supply MCQ Questions with Answers Question MC MR AC AR refers to long term equilibrium ...........

Behavior and Supply MCQ Questions with Answers

Question: MC=MR=AC=AR refers to long term equilibrium of

Competitive firm

Oligopoly firm

Monopoly firm

None of these

- MC=MR=AC=AR is a condition that describes long-term equilibrium, typically in a perfectly competitive market.

- In a perfectly competitive firm:

- MC (Marginal Cost) = MR (Marginal Revenue) means firms produce at a level where profit is maximized.

- AC (Average Cost) = AR (Average Revenue) means firms earn normal profits in the long term.

- Option 1: Competitive firm (Perfect Competition) :

- This is where many firms compete, and this equilibrium condition applies.

- Option 2: Oligopoly firm:

- Few large firms dominate, not fitting the MC=MR=AC=AR condition.

- Option 3: Monopoly firm:

- One large firm controls the market, with no direct competitors, different equilibrium.

- Option 4: None of these:

- Not applicable as perfect competition fits.

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