For a given market price, a competitive firm's average- revenue curve
A) increases to the right and then declines when MC = MR.
B) is the same as the firm's demand curve.
C) is a positively sloped straight line, starting from the origin.
D) is a straight line that coincides with the market demand curve.
E) is the same as the firm's TR curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each firm faces a horizontal demand curve, which also represents the firm's average revenue curve. This is because the firm can sell any quantity of the good or service at the market price, and therefore, the price remains constant regardless of the firm's level of output.

For a Given Market Price, a Competitive Firm's Average- Revenue