Which one of the following statements for a firm’s equilibrium in Perfect Competition is not correct?
- A. The market price must be greater or equal to average variable cost in the short run.
- B. The market price must be equal to marginal cost.
- C. The market price must be equal to average cost in the long run.
- D. The marginal cost decreases at the equilibrium output. ✓
Correct Answer: D. The marginal cost decreases at the equilibrium output.
Explanation
At equilibrium output in perfect competition, the marginal cost curve must be increasing, not decreasing.
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