In the case of the perfectly competitive firm:

Question

Quizplus · Accepted Answer

In perfect competition, a firm is a price taker and has no control over the market price. Therefore, the firm's marginal revenue is equal to the market price. This is because the firm can sell as much output as it wants to at the market price, and any additional unit sold will bring in the same amount of revenue as the previous unit. Therefore, the marginal revenue curve is a horizontal line at the market price.

In the Case of the Perfectly Competitive Firm