Only 1
Both 1 and 3
2, 3 and 4
All of the above
Answer is Right!
Answer is Wrong!
The correct answer is D. All of the above.
In long-run equilibrium, a firm operating under perfect competition will produce at a point where MC = MR, AC = AR, and AR = MR.
- MC = MR: This condition ensures that the firm is producing at the point where marginal revenue is equal to marginal cost. This is the point where the firm is maximizing its profits.
- AC = AR: This condition ensures that the firm is producing at the point where average revenue is equal to average cost. This is the point where the firm is covering its average costs and making zero economic profit.
- AR = MR: This condition ensures that the firm is producing at the point where average revenue is equal to marginal revenue. This is the point where the firm is maximizing its output.
In conclusion, the conditions of long-run equilibrium for a firm operating under perfect competition are MC = MR, AC = AR, and AR = MR.