The demand curve confronting a competitive firm
A)Equals the marginal revenue curve.
B)Is horizontal,as is the market demand curve.
C)Slopes downward,while the market demand curve is horizontal.
D)Slopes downward,and the marginal revenue curve is below it.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, a single firm cannot affect the price of the product, thus it must accept the price set by the market. The demand curve faced by a competitive firm is therefore horizontal, identical to the market demand curve. Since the firm is a price taker, the marginal revenue curve is also horizontal and equal to the demand curve, making choice A the correct answer.

The Demand Curve Confronting a Competitive Firm