Match the LIST-I with LIST-II
(SMC = Short run marginal cost, AVC = Average variable Cost, MR= Marginal Revenue)
LIST-I LIST-II A. Perfectly competitive Market I. Normal profit in the long run B. Point below where SMC curve cuts the AVC curve II. Break Even Point C. Supply curve cuts the SMC curve at minimum III. Shut Down Point D. MR is precisely the market price IV. Perfect Competition
Choose the correct answer from the options given below:
Match the LIST-I with LIST-II
(SMC = Short run marginal cost, AVC = Average variable Cost, MR= Marginal Revenue)
| LIST-I | LIST-II | ||
|---|---|---|---|
| A. | Perfectly competitive Market | I. | Normal profit in the long run |
| B. | Point below where SMC curve cuts the AVC curve | II. | Break Even Point |
| C. | Supply curve cuts the SMC curve at minimum | III. | Shut Down Point |
| D. | MR is precisely the market price | IV. | Perfect Competition |
Choose the correct answer from the options given below:
Solution
In perfect competition, free entry and exit ensure firms earn only normal profit in the long run (A-I). Below the point where SMC cuts AVC at its minimum, the firm stops producing, so it is the shut down point (B-III). The remaining pair links C with the break even point (C-II), and MR equal to market price is the defining feature of perfect competition (D-IV).
Note: Statement C is loosely worded; the break even point is where SMC cuts SAC at its minimum. We matched C-II by elimination, which appears to be the intended pairing.
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