Perfectly competitive firms will:

A) maximize total revenue by using the marginal decision rule.
B) increase output up to the point that the marginal revenue of an additional unit of output is greater than the marginal cost.
C) increase output up to the point that the marginal revenue of an additional unit of output is equal to the marginal cost.
D) always attempt to minimize average variable cost.

Perfect Competition

A market structure characterized by a large number of small firms, a homogenous product, perfect information, and easy entry and exit, leading to firms being price takers.

Marginal Decision Rule

A principle stating that an action should be taken if, and only if, the marginal benefit of the action exceeds its marginal cost.

Marginal Revenue

The extra revenue gained from the sale of an additional unit of a product or service.