If the AR curve is a horizontal, straight line, then the MR curve will be:

[1 mark]

Downward sloping

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Horizontal straight line

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Upward sloping

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Inversely shaped

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Solution

The correct option is B Horizontal straight line
A firm under perfect competition is a price taker. It cannot influence/change the market price, implying a constant AR for a firm corresponding to all levels of output. As AR is equal to MR, it will be horizontal as well.

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Comment on the shape of the MR curve in case the TR curve is a

(i) positively sloped straight line, passing through the origin

(ii) horizontal straight line.

A R

M R

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