In perfect competition, the market price is equal to marginal revenue, as each firm is a price taker and cannot influence the market price. Marginal revenue is the change in total revenue that results from producing one additional unit of output, and in perfect competition, this change is equal to the market price. Therefore, choice B is the best answer.

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Marginal Revenue

Question 35

Multiple Choice

Marginal revenue:

A) is the slope of the average revenue curve.
B) equals the market price in perfect competition.
C) is the change in quantity divided by the change in total revenue.
D) is the price divided by the change in quantity.

Correct Answer: