a. Identify the equilibrium condition of a firm under perfect competition. 1. AC=MR, & AC cuts MR from above. 2. MC=MR, & AC cuts MR from below.

Question

Choose the correct answer from the given multiple choices. 

a. Identify the equilibrium condition of a firm under perfect competition.

1. AC=MR, & AC cuts MR from above. 

2. MC=MR, & AC cuts MR from below. 

3. AC=MR, & MC cuts MR from below. 

4. MC=MR, &MC cuts MR from above. 

5. MC=MR, & MC cuts MR from below.

b. The demand for the product of a firm is perfectly elastic in one of the following markets. Identify the market. 

1. monopoly 

2. monopolistic competition 

3. perfect competition 

4. monopsony 

5. oligopoly

Answer 1

a. 5 - MC=MR, & MC cuts MR from below.

b. 3 - perfect competition