For a perfectly competitive firm like Sendit, the demand curve it faces is identical to which of its other curves?

• A. Its supply curve
• B. Its average total cost curve
• C. Its average variable cost curve
• D. Its marginal revenue curve

Answer: (D)

Verified step by step guidance

1. Understand that in a perfectly competitive market, the firm is a price taker, meaning it cannot influence the market price and must accept it as given.
2. Recognize that the demand curve facing a perfectly competitive firm is perfectly elastic at the market price, reflecting that the firm can sell any quantity at that price.
3. Recall that the marginal revenue (MR) is the additional revenue gained from selling one more unit of output, and in perfect competition, MR equals the market price because each additional unit sells at the same price.
4. Note that since the demand curve is horizontal at the market price, it coincides with the marginal revenue curve, meaning the demand curve the firm faces is identical to its marginal revenue curve.
5. Understand that this is different from the supply curve, average total cost curve, or average variable cost curve, which represent different economic concepts and are not identical to the demand curve in perfect competition.