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WAEC Economics 2022 Question 21

Question 21

Market Structures

The sufficient condition for a firm to be in equilibrium is that the

  1. A.firm must show that it is profitable
  2. B.marginal cost must be equal to average revenue
  3. C.marginal revenue curve is above the average revenue curve
  4. D.marginal cost curve cuts the marginal revenue curve from below
Show the answer and explanation

Answer: D (marginal cost curve cuts the marginal revenue curve from below)

Explanation

MC = MR is necessary; MC cutting MR from below (rising MC) makes it sufficient.