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 a purely competitive market, a firm is a price taker and can sell any quantity at the market price. Therefore, the demand curve it faces is perfectly elastic (horizontal) and is the same as its marginal revenue curve.

The Demand Curve Faced by a Purely Competitive Firm