If a firm in a perfectly competitive market faces an equilibrium price of $5,its marginal revenue
A) will be greater than $5.
B) will be less than $5.
C) maybe either greater or less than $5.
D) will also be $5.
E) will be any amount but $5.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the demand curve facing a firm is a horizontal line at the market price. Therefore, the marginal revenue for each unit of output sold is equal to the market price. Hence, the marginal revenue of the firm will also be $5.

If a Firm in a Perfectly Competitive Market Faces an Equilibrium