Price under perfect competition

I am trying to figure out the answers to these question. Nothing in my book guides me towards the solution. I just want verification that I am doing the homework right

Jerry's Quarry sells building stone in a perfectly competitive market. At its current level of building stone production, Jerry's quarry has marginal cost equal to $45 and AVC is rising. If the market price of building stone is $50, Jerry's Quarry should :

decrease the level of building stone production
continue producing its current level of production (I chose this for the answer)
increase its production of building of stone
shut-down and produce no building stone.

For a perfectly competitive firm, price equals marginal revenue because: (Points: 2)
when another unit of good is sold, total revenue increases by the price of the good
when another unit of good is sold, total revenue decreases by the price of the good
when another unit of good is sold, total revenue increases by less than the price of the good (I chose this one as the answer and I want to make sure I am right)
when another unit of good is sold, total revenue increases by more than the price of the good

Solution Summary

This explains the pricing under perfect competition