Question

In a perfectly competitive market, the process of entry and exit will end when

a. accounting profits are zero.
b. price equals minimum marginal cost.
c. economic profits are zero.
d. marginal revenue equals marginal cost.

Answer 1

In a perfectly competitive market, the process of entry and exit will end when marginal revenue equals marginal cost.

A perfectly competitive market is a hypothetical market because in that market competition is at the highest, best level it could be. In this market producers would produce the exact and best amount of something possible for customers and society.