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JAMB Economics 2000 Question 14

Question 14

Market Structures

The condition for equilibrium price and quantity under perfect competition is

  1. A.MC = AR = TR
  2. B.TC = AR = P
  3. C.MC = AR = P
  4. D.MC = AR = TC
Show the answer and explanation

Answer: C (MC = AR = P)

Explanation

A perfectly competitive firm produces where MC = MR, and for it MR = AR = price, so MC = AR = P.