The correct answer is A. Marginal revenue.
A perfectly competitive firm is a price taker, which means that it cannot influence the market price of its product. The firm’s marginal revenue is equal to the market price, and the firm maximizes its profit by producing output at which marginal revenue equals marginal cost.
Average revenue is equal to the market price divided by the quantity produced. Average variable cost is equal to total variable cost divided by the quantity produced. Average fixed cost is equal to total fixed cost divided by the quantity produced.
A perfectly competitive firm will not produce at an output level where marginal cost is greater than average variable
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