The following figure shows equilibrium at the industry and firm level.Figure 10.6
In the figure,
S 1 , S 2 , S 3 are the market supply curves.D 1 and D 2 are the market demand curves.MC is the marginal cost curve of the firm.MR 1 and MR 2 are the marginal revenue curves of the firm.ATC is the average-total-cost curve of the firm.
-From a social viewpoint, when price = marginal cost:

Question

The following figure shows equilibrium at the industry and firm level.Figure 10.6
  In the figure,
S 1 , S 2 , S 3 are the market supply curves.D 1 and D 2 are the market demand curves.MC is the marginal cost curve of the firm.MR 1 and MR 2 are the marginal revenue curves of the firm.ATC is the average-total-cost curve of the firm.
-From a social viewpoint, when price = marginal cost:

Quizplus · Accepted Answer

When the price is equal to the marginal cost, it means that the resources are being used efficiently and the economy is producing the right quantity of goods and services at the lowest possible cost. This is because firms are not producing more than what consumers want (as indicated by the market demand curve) and are not incurring any additional cost of production. Therefore, the economy as a whole is attaining economic efficiency.

The Following Figure Shows Equilibrium at the Industry and Firm