In the classical model,
A)firms are assumed to be perfect competitors who choose their output level so as to maximize profits.
B)the perfectly competitive firm will increase output until the marginal cost of producing one unit of output equals the marginal revenue received from the sale of that particular unit of output.
C)marginal revenue is equal to product price for the perfectly competitive firm.
D)All of the above

Question

Quizplus · Accepted Answer

All of the above statements are true in the classical model of perfect competition. Firms are assumed to be price takers and perfect competitors who maximize their profits by producing where marginal cost equals marginal revenue, which is equal to the product price.

In the Classical Model