In a perfectly competitive market,________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, there are many buyers and sellers, so no single buyer or seller can influence the price. Therefore, the market price is determined by the intersection of the industry's supply and demand curves. Since each firm in a perfectly competitive market is a price taker, it faces a perfectly elastic demand curve, meaning that it can sell as much output as it wants at the prevailing market price. This means that the marginal revenue curve for a perfectly competitive firm is perfectly horizontal and equal to the market price. Therefore, in a perfectly competitive market, price is always equal to marginal revenue (B).

In a Perfectly Competitive Market,________