Under what circumstances are the marginal expenditure for an input and the average expenditure always equal? Where there is a:
A) competitive buyer.
B) competitive seller.
C) monopoly buyer.
D) monopoly seller.

Question

Quizplus · Accepted Answer

Marginal expenditure for an input and the average expenditure are always equal in a competitive market. In a competitive market, the buyers compete with each other, and the price for an input is determined by the market forces of supply and demand. Therefore, each buyer pays the same price for the input, and their marginal expenditure is equal to the average expenditure. However, in a monopoly market, the seller has control over the price, and the buyer may have to pay a higher price for the input than the average expenditure, resulting in a difference between marginal and average expenditure.

Under What Circumstances Are the Marginal Expenditure for an Input