A. marginal revenue curve is above the average revenue curve
B. marginal cost curve cuts the marginal revenue curve from below
C. firm must show that it is profitable
D. marginal cost must be equal to average revenue
Correct Answer:
Option B – marginal cost curve cuts the marginal revenue curve from below
Explanation
A firm is said to be in equilibrium when it satisfies the following conditions:
– the first condition for the equilibrium of the firm is that its profit should be maximum
– Marginal cost should be equal to marginal revenue
– Marginal cost must cut Marginal revenue from below
