Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue A)increases if MR ATC. B)does not change. C)increases. D)decreases.

Question

Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenue
A)increases if MR < ATC and decreases if MR > ATC.
B)does not change.
C)increases.
D)decreases.

Quizplus · Accepted Answer

In a perfectly competitive market, a single firm cannot affect the market price of the product by changing its output level. Therefore, marginal revenue is always equal to the market price and will not change when the firm changes its level of output.

Whenever a Perfectly Competitive Firm Chooses to Change Its Level