[amp_mcq option1=”AC = MR = MC” option2=”MC = MR = AR” option3=”AC = MC” option4=”AR = MR” correct=”option1″]<\/p>\n
The correct answer is: A. AC = MR = MC<\/strong><\/p>\n In the long run, a firm operating under perfect competition will produce at the point where average cost (AC) is equal to marginal cost (MC). This is because, in the long run, firms can enter and exit the market freely. If a firm is making profits, other firms will enter the market, increasing the supply of the good and driving down prices. This will continue until profits are driven to zero. Conversely, if a firm is making losses, firms will exit the market, decreasing the supply of the good and driving up prices. This will continue until losses are driven to zero.<\/p>\n At the point where AC = MC, the firm is producing at the minimum point of its AC curve. This means that the firm is producing at the most efficient level of output. It is also the point where the firm is making zero economic profits. This is because, at this point, the firm’s revenue is equal to its costs.<\/p>\n The other options are incorrect because they do not represent the condition of long period equilibrium for a firm operating under perfect competition. Option B, MC = MR = AR, is the condition of short-run equilibrium for a firm operating under perfect competition. Option C, AC = MC, is the condition of long-run equilibrium for a firm operating under monopoly. Option D, AR = MR, is the condition of equilibrium for a firm operating under any market structure.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”AC = MR = MC” option2=”MC = MR = AR” option3=”AC = MC” option4=”AR = MR” correct=”option1″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-48439","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n