For a perfectly competitive firm,

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm's marginal revenue is equal to the price of the good (A), because the firm is a price taker and can sell as much as it wants at the market price. The condition for maximizing profit is where price equals marginal cost (B), which is also where marginal revenue equals marginal cost. Selling an additional unit increases total revenue by the price of the good (C), which is the definition of marginal revenue in this context. Therefore, all three statements are correct.

For a Perfectly Competitive Firm