If the ___________ firm has zero costs or only has fixed cost, the quantity supplied in equilibrium is given by the point where the average revenue is zero.
Perfect Competition
For a firm with zero or only fixed costs, marginal cost is zero. In perfect competition, equilibrium for the firm requires price equal to marginal cost, so \(P = MC = 0\). Since average revenue equals price (\(AR = P\)), equilibrium output is the quantity where AR = 0.
Under monopoly, oligopoly or monopolistic competition the firm faces a downward-sloping demand curve and produces where MR = MC = 0, which gives a positive price (AR > 0), not zero.
Similar Questions
Which of the following comes under the Quarternary sector?
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Goods for which demand move in the opposite direction of the income of the consumer are called?
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Important Questions from Economy
When goods are produced by exploiting natural resources, it is an activity associated with:
A system in which local farmers were allowed to cultivate temporarily within a plantation is known as:
Which goods from India dominated the international textile markets before the age of mechanized industries?
Which type of farming is practiced in areas of high population pressure on land?
The major economic attribute for comparing countries is their:
