Under perfect competition, a firm's

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In perfect competition, a firm is a price taker, meaning it has no control over the market price and must accept the market price for its output. As a result, the demand curve for the firm's output is perfectly elastic or horizontal. Since the firm's price is fixed, its average revenue curve is also horizontal and identical to its demand curve. Since the firm can sell all of its output at the market price, any increase in production will not change the price, meaning the firm's marginal revenue curve is also identical to its demand and average revenue curves. Therefore, in perfect competition, the demand curve, average revenue curve, and marginal revenue curve are all identical.

Under Perfect Competition, a Firm's