Price-Taking Firm:
A price-taking firm is a firm that operates in a perfectly competitive market where it has no control over the price of the goods or services it sells. The firm takes the market price as given and adjusts its quantity of output accordingly. In this scenario, the correct answer is option 'B', which states that marginal revenue is equal to price.

Marginal Revenue:
Marginal revenue is the additional revenue generated by selling one additional unit of output. It is calculated by dividing the change in total revenue by the change in quantity sold. In a perfectly competitive market, the price is constant, and therefore, the marginal revenue is equal to the price.

Explanation:
In a perfectly competitive market, there are numerous buyers and sellers, and the products are homogeneous, meaning they are identical in nature. Each firm is a price-taker, which means it has no market power to influence the price. The firm can sell as much as it wants at the prevailing market price, but it cannot charge a higher price without losing all its customers.

Since the firm is a price-taker, it faces a horizontal demand curve, which means that the price remains constant regardless of the quantity sold. Therefore, if the firm wants to sell more output, it has to lower the price for all units, not just the additional one. This results in a constant marginal revenue equal to the price.

To understand this concept, consider the following example: Let's say a price-taking firm sells its output for $10 per unit. If it wants to sell one more unit, it has to lower the price for all units to, let's say, $9. The firm's total revenue will increase by $9 for selling the additional unit, but it will also decrease by $1 for all the other units. Therefore, the change in total revenue is $9 - $1 = $8, and the change in quantity sold is 1 unit. Dividing the change in total revenue ($8) by the change in quantity sold (1 unit) gives us the marginal revenue of $8, which is equal to the price of $10.

Therefore, in a price-taking firm operating in a perfectly competitive market, the marginal revenue is equal to the price.