Why is the MR curve under pure competition horizontal?

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1197268

2026-03-28 19:55

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In pure competition, the MR (marginal revenue) curve is horizontal because firms are price takers, meaning they must accept the market price determined by supply and demand. Since each additional unit sold at this market price does not affect the overall market price, the revenue gained from selling one more unit (marginal revenue) remains constant and equal to the market price. Thus, the MR curve is perfectly elastic, reflecting the firm's inability to influence prices.

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