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WAEC Economics 1988 Question 10

Question 10

Market Structures

The equilibrium position of a firm is attained

  1. A.when MC = AR
  2. B.when MC = P
  3. C.when MC = MR.
  4. D.when AC = AR
  5. E.when AR = MR
Show the answer and explanation

Answer: C (when MC = MR.)

Explanation

A firm is in equilibrium (maximising profit) where marginal cost equals marginal revenue.