If a business in a perfectly competitive industry is confronted with an equilibrium price of $5,its marginal revenue:
A)may be either greater or less than $5
B)will also be $5
C)will be less than $5, but a positive number
D)will be greater than $5
E)will be negative

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each firm is a price taker, meaning that they cannot influence the market price. Therefore, the marginal revenue for the firm is equal to the market price. Hence, if the equilibrium price is $5, the marginal revenue of the firm will also be $5.

If a Business in a Perfectly Competitive Industry Is Confronted