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WAEC Economics 2016 Question 20

Question 20

Market Structures

The necessary condition for a firm to be in equilibrium is that marginal revenue is

  1. A.greater than marginal cost.
  2. B.equal to marginal cost.
  3. C.less than average revenue.
  4. D.equal to average cost.
Show the answer and explanation

Answer: B (equal to marginal cost.)

Explanation

A firm maximises profit where MR = MC.