A competitive firm's marginal revenue curve is the same as its demand curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a firm is a price taker and therefore its demand curve is perfectly elastic, which means that any increase in price will result in no demand for its product. Since marginal revenue is the additional revenue gained from selling one more unit of output, it will be equal to the price of the product in a perfectly competitive market. Therefore, the competitive firm's marginal revenue curve is the same as its demand curve, which is perfectly elastic horizontal line.

A Competitive Firm's Marginal Revenue Curve Is the Same as Its