For a perfectly competitive firm,

Question

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In a perfectly competitive market, a firm is a price-taker, meaning it cannot affect the market price. Therefore, the firm's marginal revenue is also equal to the market price. In order to maximize profits, the firm should produce up to the point where marginal cost equals marginal revenue (which is equal to the market price). Thus, B is the correct answer. A, C, and D are incorrect statements. Marginal revenue is equal to price in a perfectly competitive market, not greater than price (A). Selling an additional unit will increase total revenue, but not necessarily by $1 (C). Marginal revenue can be equal to, greater than, or less than marginal cost depending on the output level, so D is also incorrect.

For a Perfectly Competitive Firm