Answer
b) marginal cost equals the price.
Work Step by Step
We know that, the profit maximizing point for a competitive firm is when Marginal Revenue = Marginal Cost.
Again, We know that
For a competitive firm Total revenue = Price×Quantity
Differentiating both sides we get,
dTR/dQ = Price
or, Marginal Revenue = Price.
Hence, a competitive firm maximizes its profit when Marginal Cost = Price
