Why does price equal marginal cost (P = MC) in a perfectly competitive market in equilibrium?
A. In perfect competition, buyers set marginal revenue equals marginal cost (MR = MC) and sellers set marginal revenue equal to price (MR = P).
B. In perfect competition marginal revenue equals price (MR = P), and profit-maximizing businesses set marginal revenue equal to marginal cost (MR = MC).
C. In perfect competition, sellers set marginal revenue equals marginal cost (MR = MC) and buyers set marginal revenue equal to price (MR = P).
D. In perfect competition marginal revenue equals marginal cost (MR = MC), and profit-maximizing businesses set marginal revenue equal to price (MR = P).
Answer: B
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