{"id":43565,"date":"2024-04-15T21:31:15","date_gmt":"2024-04-15T21:31:15","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=43565"},"modified":"2024-04-15T21:31:15","modified_gmt":"2024-04-15T21:31:15","slug":"in-the-long-run-the-market-price-of-a-commodity-is-equal-to-its-minimum-average-cost-of-production-if-there-is","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-the-long-run-the-market-price-of-a-commodity-is-equal-to-its-minimum-average-cost-of-production-if-there-is\/","title":{"rendered":"In the long-run, the market price of a commodity is equal to its minimum average cost of production, if there is"},"content":{"rendered":"

[amp_mcq option1=”perfect competition” option2=”monopoly” option3=”oliogopoly” option4=”monopolistic competition” correct=”option1″]<\/p>\n

The correct answer is: A. perfect competition.<\/p>\n

In perfect competition, there are many firms producing identical products, and each firm is a price taker. This means that each firm has no control over the market price, and must accept the market price as given. In order to maximize profits, each firm will produce at the point where marginal cost equals marginal revenue. At this point, the firm’s average cost will be at its minimum level.<\/p>\n

In monopoly, there is only one firm producing a good or service. The monopolist has market power, and can therefore charge a price above marginal cost. This means that the monopolist’s average cost will be above its minimum level in the long run.<\/p>\n

In oligopoly, there are a few firms producing a good or service. The firms in an oligopoly have some market power, but not as much as a monopolist. This means that the firms in an oligopoly can charge a price above marginal cost, but not as high as a monopolist would charge. The firms in an oligopoly will also have higher average costs than a firm in perfect competition.<\/p>\n

In monopolistic competition, there are many firms producing differentiated products. The firms in monopolistic competition have some market power, but not as much as a monopolist. This means that the firms in monopolistic competition can charge a price above marginal cost, but not as high as a monopolist would charge. The firms in monopolistic competition will also have higher average costs than a firm in perfect competition.<\/p>\n

In conclusion, the market price of a commodity is equal to its minimum average cost of production in the long run, if there is perfect competition.<\/p>\n","protected":false},"excerpt":{"rendered":"

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