Under long-run perfect competition, which of the following are the same (equal) at all levels of output?
A) Market price and marginal cost.
B) Market price and marginal revenue.
C) Marginal cost and marginal revenue.
D) Market cost and marginal cost.

Question

Quizplus · Accepted Answer

In long-run perfect competition, firms will continue to enter or exit the market until profits are driven to zero. This means that the market price will equal the marginal cost of production for all firms. However, under perfect competition, the market demand curve is perfectly elastic and therefore, each firm's marginal revenue will also be equal to the market price. Therefore, market price and marginal revenue are the same at all levels of output.

Under Long-Run Perfect Competition, Which of the Following Are the Same