The correct answer is: B. marginal revenue is equal to rising marginal cost
In perfect competition, firms are price-takers, meaning that they cannot influence the market price of their product. As a result, the firm’s marginal revenue curve is equal to the market price. The firm will maximize profits by producing at the point where marginal revenue is equal to marginal cost.
Option A is incorrect because the firm will not be in equilibrium if marginal cost is equal to the minimum average cost. This is because the firm could produce more output at a lower cost and earn higher profits.
Option C is incorrect because the firm will not be in equilibrium if average revenue is equal to average cost. This is because the firm could produce less output and earn higher profits if average revenue is greater than average cost.
Option D is incorrect because the firm will not be in equilibrium if marginal revenue is equal to the falling marginal cost. This is because the firm could produce more output and earn higher profits if marginal revenue is greater than marginal cost.
In conclusion, the firm under perfect competition will be in short run equilibrium when marginal revenue is equal to rising marginal cost.