Discussion
The demand curve for a perfectly competitive firm is ..............
Answer: A
The firm's demand curve is a horizontal straight line.
A perfectly competitive firm is a price taker: it is one of very many sellers of an identical product, so it can sell any quantity at the market price but nothing above it. Its demand curve is therefore perfectly elastic, a horizontal line at the market price, which is also its average and marginal revenue.
A vertical line would be perfectly inelastic demand, and a downward sloping curve is the market demand curve or that of a monopolist; an upward sloping demand curve does not apply here.
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