In answering the question,assume a graph in which dollars are measured on the vertical axis and output on the horizontal axis. Refer to the information.For a purely competitive firm:

A) marginal revenue will graph as an upsloping line.
B) the demand curve will lie above the marginal revenue curve.
C) the marginal revenue curve will lie above the demand curve.
D) the demand and marginal revenue curves will coincide.

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Rachael Ellis · Accepted Answer

Final Answer : D, Explanation :  In perfect competition, the firm is a price taker, meaning that it cannot influence the market price. Therefore, the demand curve for the firm is perfectly elastic and horizontal at the market price. Since marginal revenue represents the change in revenue resulting from a one-unit change in output, it is also equal to the market price under perfect competition. As a result, the demand and marginal revenue curves will coincide and be a horizontal line at the market price.

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