In a competitive equilibrium,each producer produces at a point where:
A)the price of the good equals the marginal cost of producing the good.
B)the price of the good equals the wage rate.
C)the price is greater than the average revenue.
D)the wage rate is equal to the marginal revenue.

Question

Quizplus · Accepted Answer

In a competitive equilibrium, each producer will produce at a point where the price of the good equals the marginal cost of producing the good. This is because if the price were higher than the marginal cost, the producer would have an incentive to increase production and if the price were lower than the marginal cost, the producer would have an incentive to decrease production. Thus, in equilibrium, the price and the marginal cost will be equal.

In a Competitive Equilibrium,each Producer Produces at a Point Where