Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenueGroup of answer choicesincreases if MR < ATC and decreases if MR > ATC.does not change.always increases.always decreases.
Question
Whenever a perfectly competitive firm chooses to change its level of output, its marginal revenueGroup of answer choicesincreases if MR < ATC and decreases if MR > ATC.does not change.always increases.always decreases.
Solution
The correct answer is: does not change.
In a perfectly competitive market, the marginal revenue (MR) a firm receives from selling an additional unit of output is constant and equal to the market price. This is because the firm, being a price taker, has no control over the price, which is determined by the market. Therefore, no matter how much output the firm decides to produce, its marginal revenue remains the same. It does not increase or decrease with the level of output.
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