Which one of the following statements for a firm's equilibrium in Perfect Competition is not correct? (a) The market price must be greater or equal to average variable cost in the short run. (b) The market price must be equal to marginal cost. (c) The mar

examrobotsa's picture

Submitted by examrobotsa on

Q: 71 (CDS-II/2024)
Which one of the following statements for a firm's equilibrium in Perfect Competition is not correct?
(a) The market price must be greater or equal to average variable cost in the short run.
(b) The market price must be equal to marginal cost.
(c) The market price must be equal to average cost in the long run.
(d) The marginal cost decreases at the equilibrium output.

question_subject: 

Economics

question_exam: 

CDS-II

In perfect competition, at equilibrium, marginal cost equals market price, and it typically increases as output increases. The incorrect statement is that marginal cost decreases at equilibrium; instead, marginal cost should rise.