A perfectly competitive firm with a random demand has a_______ demand curve and ________ marginal revenue curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm faces a perfectly elastic (horizontal) demand curve because the price is determined by the market, and it can sell any quantity at the market price. Consequently, its marginal revenue curve is also horizontal at the same market price, as each additional unit sold brings in the same amount of revenue.

A Perfectly Competitive Firm with a Random Demand Has A_______