Since a perfectly competitive firm is a price taker, it is faced with a straight line demand curve i.e. AR is ______________.

parallel to Y Axis

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parallel to X axis

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slope downward from right to left

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slope downward from left to right

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Solution

The correct option is C parallel to X axis
Perfect competition is a type of market where there are large number of buyers and sellers who deals in homogeneous product due to which no individual unit is able to influence the price of the product and the firms have to quote a single price that prevails in the market. Owing to this reason , the demand curve is a straight line parallel to X-axis.

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