Final answer:
The correct answer is C.In competitive markets, sellers must sell at a market-determined price, not at the highest or lowest possible price.
Firms are price takers in a perfectly elastic demand environment and focus on equating marginal revenue with marginal cost to maximize profits.
Step-by-step explanation:
The rational rule for sellers in competitive markets is to sell at a price determined by the market.
This is because a perfectly competitive firm acts as a price taker, meaning it must accept the market price set by the forces of supply and demand.
Sellers cannot choose to sell at the highest or lowest price possible; they must adhere to the market price to sell their products.
Such firms face a perfectly elastic demand curve, indicating buyers are willing to purchase any quantity at the market price.
Hence, firms aim to maximize profits by adjusting quantities such that marginal revenue, equivalent to the market price, equals marginal cost.