Which of the following is true of a perfectly competitive firm and a monopoly in the long run?
A) P = MC
B) P = ATC
C) MR = MC
D) P = MR

Question

Quizplus · Accepted Answer

In the long run, both a perfectly competitive firm and a monopoly will produce where MR (marginal revenue) equals MC (marginal cost) in order to maximize their profits. Therefore, the correct answer is C. P (price) equals MC (marginal cost) only in a perfectly competitive market in the long run, and P equals ATC (average total cost) only in the short run in a perfectly competitive market. P equals MR (marginal revenue) only for a monopoly in the short run.

Which of the Following Is True of a Perfectly Competitive