In perfect competition, a firm's demand curve
A) and the marginal revenue curve facing the firm are identical.
B) is always above the marginal revenue curve facing the firm.
C) is always below the marginal revenue curve facing the firm.
D) intersects the marginal revenue curve when marginal revenue is minimized.

Question

Quizplus · Accepted Answer

In perfect competition, a firm's demand curve is perfectly elastic because the firm is a price taker, meaning it can sell any quantity at the market price. Therefore, the price (which is also the demand curve for the firm) is equal to the marginal revenue for each unit sold, making the firm's demand curve and the marginal revenue curve identical.

In Perfect Competition, a Firm's Demand Curve