Discussion
A perfectly competitive firm can sell all the output it wants to:
Answer: D
A perfectly competitive firm is a price taker, since it is one of very many sellers and each one is too small to affect the market price. It can sell all it wants to at the going price, so the demand curve it faces is horizontal, and it does not have to lower its price to sell more. Cutting supply or lowering costs is not what lets it sell any amount. The answer is without lowering the price, option D. The firm's marginal revenue equals the price, which is why it equates price with marginal cost to maximise profit.
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