PRC-3 · Chapter 12 · Question 64 of 69
In a perfect competition market structure, what does the individual firm's downward-sloping marginal revenue (MR) curve look like?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) It is identical to the completely horizontal Average Revenue (AR) curve
Explanation
Under perfect competition, a firm is a price taker and can sell all it wants at the market price. Thus, Price = AR = MR, resulting in a perfectly horizontal line.
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