The demand curve faced by a purely competitive firm
A)has unitary elasticity.
B)yields constant total revenues even when price changes.
C)is identical to the market demand curve.
D)is the same as its marginal revenue curve.

Question

Quizplus · Accepted Answer

In pure competition, the demand curve faced by a firm is perfectly elastic, meaning the firm can sell any quantity of its product at the market price. This makes the price (P) equal to the marginal revenue (MR) for each unit sold, hence the firm's demand curve is also its marginal revenue curve.

The Demand Curve Faced by a Purely Competitive Firm