Found this question in my notes from some time ago with a note to myself that I thought I should follow up on. "A company maximises profits by setting output at such a level that the marginal cost of production equals the price for which the company sells the product - describe the conditions under which this is true" Although the answer is about perfect competition and perfect markets, theoretically could this also happen if a monopoly could indulge in perfect price discrimintation? MR=AR=MC?
There are two other conditions in which price could equal marginal cost: under perfect price discrimination (as you say) and also under a state monopoly that operates a marginal cost pricing policy. If the firm practises perfect price discrimination then the marginal revenue from selling an additional unit is just the price charged for selling the additional unit. By equating MR with MC, the firm is equating AR (price) with MC. (In this question, there is a suggestion that there is a single price for the product.) A state monopoly might simply be given instructions to produce at the social optimum, ie where MC = price. (In this question, there is a suggestion that the company is one of many, ie not a single state monopolist.)
