When perfect competition prevails,which characteristic of firms are we likely to observe?

A) None of them ever has diminishing marginal returns.
B) They all try to operate where price equals average variable cost.
C) They all try to operate where price equals total cost.
D) They are all price takers.

Price Takers

Market participants who accept prevailing prices because they have no power to influence the market price due to their small market share.

Perfect Competition

A market structure characterized by a large number of small firms, homogeneous products, free entry and exit, and perfect information, leading to firms being price takers.

Diminishing Marginal Returns

A principle stating that as more of a variable input is added to a fixed input, the additional output from each new unit of input will eventually decrease.