For a perfectly competitive firm, price always equals marginal cost.

Name: For a perfectly competitive firm, price always equals marginal cost.
Brand: Quizplus
Rating: 4.8 (65 reviews)

Question

Quizplus · Accepted Answer

In the short run, a perfectly competitive firm's price equals marginal cost at the profit-maximizing output level, but this condition may not hold in the short run if the firm is incurring losses. In the long run, firms will enter or exit the market until price equals marginal cost, ensuring zero economic profit.

For a Perfectly Competitive Firm, Price Always Equals Marginal Cost