Because market price remains constant as a perfectly competitive firm expands output, each firm faces

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each firm is a price taker and faces a horizontal demand curve, meaning that no matter how much they produce, they can sell it at the market price. This also means that there is no diminishing marginal revenue as each unit sold earns the same price. Additionally, constant returns to scale and constant costs do not necessarily hold true in all cases.

Because Market Price Remains Constant as a Perfectly Competitive Firm