In perfect competition, the average revenue curve of a firm is

Analyze the question: It asks about the shape and position of a perfectly competitive firm's average revenue (AR) curve.

Concept: In perfect competition, there are many buyers and sellers selling a homogeneous product. Each firm is a price taker, meaning the market sets the price and the firm cannot change it by selling more or less.

Step-by-step solution:

1. Since price (P) is fixed for the firm, every extra unit is sold at the same price.
2. Average revenue = Total revenue ÷ Quantity = (P × Q) ÷ Q = P
3. Marginal revenue = the change in total revenue from selling one more unit = P (the same fixed price)
4. So AR = MR = P at every level of output.
5. Graphically, both are the same horizontal straight line at the market price. The firm's demand curve is perfectly elastic.

Checking the options:

• A. Below MR: wrong, because they are equal.
• B. Downward sloping: wrong. This describes AR under monopoly or imperfect competition, not perfect competition.
• C. The marginal revenue curve: correct, because AR and MR coincide.
• D. Convex to the origin: wrong, because the curve is a horizontal line.

**Answer: C. The marginal revenue curve.

Exam tip: Remember "P = AR = MR = D" for a perfectly competitive firm. They are all one horizontal line. In monopoly, AR slopes downward and MR lies below it, so if you see "MR below AR," think monopoly.