The correct answer is: D. (A) is true, but (R) is not a correct explanation of (A)
A perfectly competitive firm is a price taker, which means that it has no control over the price of its product. The price is determined by the market, and the firm must accept the prevailing price in order to sell its product.
The firm is interested in deciding the level of output only because it is the only variable that it can control. The price is determined by the market, and the firm cannot change it. Therefore, the firm must decide how much output to produce in order to maximize its profits.
The reason (R) is not a correct explanation of the assertion (A) because the firm is interested in deciding the level of output only because it is the only variable that it can control, not because it is a price taker.
Here is a more detailed explanation of each option:
- Both (A) and (R) are true. This is not the correct answer because the reason (R) is not a correct explanation of the assertion (A).
- Both (A) and (R) are false. This is not the correct answer because the assertion (A) is true. A perfectly competitive firm is a price taker.
- (A) is false, but (R) is true. This is not the correct answer because the assertion (A) is true. A perfectly competitive firm is a price taker.
- (A) is true, but (R) is not a correct explanation of (A). This is the correct answer because the reason (R) is not a correct explanation of the assertion (A).