BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050

Solutions

Chapter
Section
BuyFindarrow_forward

Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

In the long-run equilibrium of a competitive market with identical firms, what are the relationships among price P, marginal cost MC, and average total cost ATC?

a. P >     MC and P > ATC.

b. P > MC and P =     ATC.

c. P =     MC and P     > ATC.

d. P = MC and     P =     ATC.

To determine
The relationship between price, marginal cost, and average total cost in the long run equilibrium of the competitive market.

Explanation

Option (d):

The price of the perfect competitive firm is equal to its marginal revenue. Thus, the firms in perfect competition maximize their revenue at the point where Price=Marginal cost . At the same time, the average total cost of the firm is equal to marginal cost. Thus, the profit-maximizing point can be written as Price=Average total cost . Thus, option ‘d’ is correct

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

List and describe four determinants of a countrys productivity.

Brief Principles of Macroeconomics (MindTap Course List)

List seven reasons risk management might increase the value of a firm.

Fundamentals of Financial Management (MindTap Course List)

CASH CONVERSION CYCLE Christie Corporation is trying to determine the effect of its inventory turnover ratio an...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)