Assume that the market for pencils is perfectly competitive. The market equilibrium price is $0.50 and Perry's Pencil Company has been selling 10,000 pencils per month. If he sells one more pencil, his marginal revenue will be
A) less than $0.50 because he will need to lower the price to sell more.
B) exactly $0.50 because he can sell one more pencil at the market equilibrium price.
C) more than $0.50 because the growing demand for his pencils shows he can sell them at a higher price.
D) impossible to predict because the market information provided is not relevant.
Correct Answer:
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