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The Theory Of The Firm Under Perfect Competition
The following three conditions must hold in the short-run.
(i) Market price (P) is equal to marginal cost (P = MC).
(ii) Marginal cost is non-decreasing and
(iii) In short-run market price (P) must be greater than or equal to average cost. However in the long-run market price (P) must be greater than or equal to average variable cost.
P ≥ AVC
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