Which of the following is true for the perfectly competitive firm?

Question

Quizplus · Accepted Answer

In perfect competition, the individual firm is a price taker and cannot control the market price. Therefore, the demand curve facing a perfectly competitive firm is perfectly elastic or horizontal. As a result, the firm can sell as much as it wants at the going market price. Consequently, the marginal revenue (MR) curve for a perfectly competitive firm is also perfectly elastic or horizontal. Since the firm can only sell its output at the market price, its average revenue (AR) or price is equal to the market price. Therefore, in perfect competition, the firm's price and MR are always equal.

Which of the Following Is True for the Perfectly Competitive