{"id":54973,"date":"2024-04-16T00:19:26","date_gmt":"2024-04-16T00:19:26","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=54973"},"modified":"2024-04-16T00:19:26","modified_gmt":"2024-04-16T00:19:26","slug":"in-perfect-competition-when-a-firm-is-in-short-periods-for-equilibrium-the-following-condition-does-apply-1-marginal-cost-must-equal-marginal-revenue-2-average-cost-must-equal-average-revenue-3","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-perfect-competition-when-a-firm-is-in-short-periods-for-equilibrium-the-following-condition-does-apply-1-marginal-cost-must-equal-marginal-revenue-2-average-cost-must-equal-average-revenue-3\/","title":{"rendered":"In perfect competition, when a firm is in short periods, for equilibrium, the following condition does apply 1. Marginal cost must equal marginal revenue. 2. Average cost must equal average revenue. 3. Marginal revenue must equal average revenue. 4. Marginal cost must equal average cost."},"content":{"rendered":"<p>\r\n    <!-- Check if it's an AMP page -->\r\n            <!-- Non-AMP version -->\r\n        <div class=\"mcq-container\" data-quiz-id=\"quizState_6a977c684bb17\">\r\n                                            <div class=\"option\" data-option-key=\"option1\" data-is-correct=\"false\">\r\n                    1, 2 and 3                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option2\" data-is-correct=\"false\">\r\n                    1 and 3                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option3\" data-is-correct=\"false\">\r\n                    2, 3 and 4                <\/div>\r\n                                            <div class=\"option\" data-option-key=\"option4\" data-is-correct=\"true\">\r\n                    Only 3                <\/div>\r\n                            \r\n            <!-- Feedback messages for non-AMP -->\r\n            <div class=\"feedback\" data-feedback=\"wrong\">Answer is Right!<\/div>\r\n            <div class=\"feedback\" data-feedback=\"right\">Answer is Wrong!<\/div>\r\n        <\/div>\r\n\r\n        <script>\r\n        document.addEventListener('DOMContentLoaded', function () {\r\n            var containers = document.querySelectorAll('.mcq-container');\r\n\r\n            containers.forEach(function(container) {\r\n                var options = container.querySelectorAll('.option');\r\n                var feedbackSelect = container.querySelector('[data-feedback=\"select\"]');\r\n                var feedbackWrong = container.querySelector('[data-feedback=\"wrong\"]');\r\n                var feedbackRight = container.querySelector('[data-feedback=\"right\"]');\r\n\r\n                options.forEach(function(option) {\r\n                    option.addEventListener('click', function() {\r\n                        var selectedOption = option.getAttribute('data-option-key');\r\n                        var isCorrect = option.getAttribute('data-is-correct') === 'true';\r\n\r\n                        \/\/ Remove previous selections\r\n                        options.forEach(function(opt) {\r\n                            opt.classList.remove('correct', 'incorrect');\r\n                        });\r\n\r\n                        \/\/ Add the correct\/incorrect class\r\n                        if (isCorrect) {\r\n                            option.classList.add('correct');\r\n                            feedbackRight.hidden = false;\r\n                            feedbackWrong.hidden = true;\r\n                        } else {\r\n                            option.classList.add('incorrect');\r\n                            feedbackRight.hidden = true;\r\n                            feedbackWrong.hidden = false;\r\n                        }\r\n\r\n                        \/\/ Hide select feedback\r\n                        feedbackSelect.hidden = true;\r\n                    });\r\n                });\r\n            });\r\n        });\r\n        <\/script>\r\n    \r\n    <!--more--><\/p>\n<p>The correct answer is D. Only 3.<\/p>\n<p>In perfect competition, a firm is a price taker, which means that it cannot influence the market price of its product. The firm&#8217;s marginal revenue curve <div class=\"youtube-subscribe-container\">\r\n        <a href=\"https:\/\/www.youtube.com\/channel\/UCNHT8lW-JmLC68rjBfZhdkg?sub_confirmation=1\" target=\"_blank\" class=\"youtube-subscribe-button\">\r\n            <span class=\"youtube-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 576 512\">\r\n                    <path d=\"M549.7 124.1c-6.3-23.7-24.8-42.3-48.3-48.6C458.8 64 288 64 288 64S117.2 64 74.6 75.5c-23.5 6.3-42 24.9-48.3 48.6-11.4 42.9-11.4 132.3-11.4 132.3s0 89.4 11.4 132.3c6.3 23.7 24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Subscribe on YouTube\r\n        <\/a>\r\n    <\/div> is equal to its demand curve, which is horizontal at the market price. The firm&#8217;s marginal cost curve intersects its average cost curve at the minimum point of the average cost curve. At this point, the firm is producing at the level of output where marginal cost is equal to marginal revenue, and average cost is at a minimum. This is the firm&#8217;s short-run equilibrium.<\/p>\n<p>Option 1 is incorrect because average cost does not need to equal average revenue in perfect competition. The firm&#8217;s average revenue curve is horizontal at the market price, but the firm&#8217;s average cost curve may be above or below the market price.<\/p>\n<p>Option 2 is incorrect because marginal cost does not need to equal average cost in perfect competition. The firm&#8217;s marginal cost curve intersects its average cost curve at the minimum point of the average cost curve, but the firm&#8217;s average cost curve may be above or below the market price.<\/p>\n<p>Option 3 is correct because marginal revenue must equal marginal cost in perfect competition for the firm <div class=\"telegram-channel-container\">\r\n        <a href=\"https:\/\/t.me\/pscnotes2025\" target=\"_blank\" class=\"telegram-channel-button\">\r\n            <span class=\"telegram-icon\">\r\n                <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 496 512\">\r\n                    <path fill=\"white\" d=\"M248,8C111,8,0,119,0,256s111,248,248,248s248-111,248-248S385,8,248,8z M362,177L320,367c-3,14-10,18-20,14l-56-41l-27,26 c-3,3-5,5-10,5l4-63L323,196c5-5-1-7-8-3l-98,62l-42-13c-9-3-10-9,2-14l162-63C351,160,365,164,362,177z\"\/>\r\n                <\/svg>\r\n            <\/span>\r\n            Join Our Telegram Channel\r\n        <\/a>\r\n    <\/div> to be in equilibrium. If marginal revenue is greater than marginal cost, the firm can increase its profits by producing more output. If marginal revenue is less than marginal cost, the firm can increase its profits by producing less output.<\/p>\n<p>Option 4 is incorrect because average cost does not need to equal marginal cost in perfect competition. The firm&#8217;s marginal cost curve intersects its average cost curve at the minimum point of the average cost curve, but the firm&#8217;s average cost curve may be above or below the market price.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Join Our Telegram Channel Subscribe on YouTube<\/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":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>In perfect competition, when a firm is in short periods, for equilibrium, the following condition does apply 1. Marginal cost must equal marginal revenue. 2. Average cost must equal average revenue. 3. Marginal revenue must equal average revenue. 4. Marginal cost must equal average cost.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/in-perfect-competition-when-a-firm-is-in-short-periods-for-equilibrium-the-following-condition-does-apply-1-marginal-cost-must-equal-marginal-revenue-2-average-cost-must-equal-average-revenue-3\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"In perfect competition, when a firm is in short periods, for equilibrium, the following condition does apply 1. Marginal cost must equal marginal revenue. 2. Average cost must equal average revenue. 3. Marginal revenue must equal average revenue. 4. 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