JAMB Economics 2022 Paper

Concept:A firm whose average revenue ($AR$) and marginal revenue ($MR$) curves are horizontal at the market price is a price taker.Explanation:In the diagram, the line $PN$ is horizontal, showing that price remains constant at all output levels.For a perfectly competitive firm, $AR = MR$, and both are represented by the same horizontal straight line.This is because a perfectly competitive firm sells any quantity at the ruling market price and cannot influence the price.In contrast, imperfect competitors, monopolies, and monopolistic competitors face downward-sloping $AR$ and $MR$ curves.Answer:C. A perfectly competitive firm