[amp_mcq option1=”AR > AC” option2=”MR = MC = AR = AC” option3=”MR = MC but AC < AR" option4="AC = AR" correct="option2"]
The correct answer is: B. MR = MC = AR = AC
In perfect competition, firms are price-takers, meaning they have no control over the price of their product. The demand curve for a firm in perfect competition is perfectly elastic, which means that the firm can sell as much or as little as it wants at the market price.
In the long run, firms in perfect competition will have zero economic profit. This is because firms will enter the market if there is positive economic profit, and they will exit the market if there is negative economic profit. As firms enter and exit the market, the market price will adjust until economic profit is zero.
At the point where economic profit is zero, the marginal revenue curve will be equal to the marginal cost curve. This is because the firm will produce the quantity of output where the marginal revenue is equal to the marginal cost. At this point, the average revenue curve will also be equal to the average cost curve. This is because the firm will produce the quantity of output where the average revenue is equal to the average cost.
Therefore, the answer to the question is: B. MR = MC = AR = AC.