In a graph that illustrates a perfectly competitive firm, marginal revenue is
A)a diagonal line that lies below the firm's demand curve.
B)a line that intersects the firm's demand curve from below at its lowest point.
C)a line that intersects the firm's average total cost curve from below at its lowest point.
D)the same as the firm's demand curve.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the firm's demand curve is perfectly elastic, meaning it is a horizontal line. The marginal revenue for a perfectly competitive firm is constant and equal to the price, which is why it coincides with the demand curve.

In a Graph That Illustrates a Perfectly Competitive Firm, Marginal