[amp_mcq option1=”MC>MR” option2=”MR>MC” option3=”MC=MR” option4=”AC=AR” correct=”option1″]<\/p>\n
The correct answer is: A firm under perfect competition will be making minimum losses (in the short run) at a point where MC>MR.<\/p>\n
A firm under perfect competition is a price taker, which means that it cannot influence the market price of its product. The firm’s marginal revenue (MR) is equal to the market price (P). The firm’s marginal cost (MC) is the additional cost incurred by producing one more unit of output.<\/p>\n
In the short run, a firm will continue to produce as long as its marginal revenue is greater than its variable cost (VC). This is because the firm can cover its variable costs and make some contribution to its fixed costs. However, if the firm’s marginal revenue falls below its variable cost, the firm will shut down in the short run.<\/p>\n
A firm will make minimum losses in the short run when its marginal cost is equal to its marginal revenue. This is because the firm is producing at the point where its losses are the smallest.<\/p>\n
Option A is incorrect because if MC>MR, the firm is producing at a point where its losses are increasing.<\/p>\n
Option B is incorrect because if MR>MC, the firm is making profits.<\/p>\n
Option C is correct because if MC=MR, the firm is producing at the point where its losses are the smallest.<\/p>\n
Option D is incorrect because if AC=AR, the firm is breaking even.<\/p>\n","protected":false},"excerpt":{"rendered":"
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