The average revenue curve of a firm in a perfect market is the same as the

Step 1: Analyze the question The question asks which curve is identical to the average revenue (AR) curve of a firm in a perfectly competitive market.

Step 2: Explain the concept In perfect competition:

• There are many buyers and sellers, and the product is homogeneous.
• The firm is a price taker. The market determines the price, and the firm can sell any quantity at that price.
• Because price stays constant at every level of output, the firm's demand curve is a horizontal line (perfectly elastic) at the market price.

Step 3: Work through the solution Average revenue is total revenue divided by quantity sold:

AR = TR ÷ Q = (P × Q) ÷ Q = P

So AR is always equal to the price. The demand curve shows the price buyers pay at each quantity, so it is also the price line. This means:

• AR = Price = Demand curve
• In perfect competition, AR = MR = Price = Demand (all one horizontal line)

Checking the other options:

• A. Supply curve: In the short run, the firm's supply curve is the part of the MC curve above AVC. It is not the AR curve.
• B. Average cost curve: This is U-shaped. It only touches AR at the break-even point (normal profit), so they are not the same curve.
• D. Total revenue curve: TR is an upward-sloping straight line from the origin, so it is not the same as the horizontal AR curve.

Step 4: Answer The AR curve is the same as the demand curve of the firm, which is option C.

Tip: Remember the chain "AR = MR = P = D" for a perfectly competitive firm. Whenever an exam asks about AR, think "AR is the demand curve" in any market structure. In perfect competition, it is also the same as MR.