True or false? When a competitive firm earns zero profit, the market price is equal to the firm's...
Question:
True or false? When a competitive firm earns zero profit, the market price is equal to the firm's both average and marginal costs.
Competitive Firms:
Competitive firms operate in a market with several other firms, all of whom aim to sell their products to a large number of buyers. The prices and quantities at which they are bound to sell their products gives rise to the competition between them. All competitive firms conduct their sales based on the prevailing market price and so they cannot decide the price in such a market setup.
Answer and Explanation: 1
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View this answerThis statement is true.
A firm earns zero profits or normal profits when it can cover all its costs of production while earning revenue as per the...
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Perfect Competition | Definition, Benefits & Examples
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Chapter 3 / Lesson 62
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Learn the definition, characteristics, and benefits of perfect competition. Review real-life examples of perfect competition between different companies.
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