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Curve MR is horizontal because:

 ▲ 0 ▼ ♥ 0 Curve MR is horizontal because: a. product price falls as output increases. b. the law of diminishing marginal utility is at work. c. the market demand for this product is perfectly elastic. d. the firm is a price taker.

Here is the full solution including the answer and explanation.

Explanation
d is correct
In a perfectly competitive market structure, there are many sellers and buyers in the market. In such type of market, firms are generally price takers meaning that firms have no influence to control prices. Every individual buyer and seller plays an insignificant part in the market, therefore, sellers do not have the power to charge higher prices than the market rate because if it does it would lose all its customers. The demand curve in a perfectly competitive market is perfectly elastic in nature which means that a small change in price can affect demand for the product hugely. Total revenue is given by the product of the price of the products and units sold of the product. It purely competitive market price is equal to marginal revenue and marginal revenue is constant to the price of the commodity. As firms have no control over the market marginal revenue is equal to the demand curve.

a is incorrect
In a perfectly competitive market structure, there are many sellers and buyers and the demand curve is perfectly elastic. Therefore, the demand curve is not downward-sloping in such a market structure. As the price of the commodity decreases, the output of the commodity increases. It indicates a downward slope of the demand curve, which doesn't justify the horizontal marginal revenue.

b is incorrect
The law of marginal utility states that when the consumption of a commodity increases the utility that is derived from additional units of commodity decreases. Marginal revenue is defined as the change in total revenue due to an additional sale of a commodity. Due to diminishing marginal utility marginal revenue is not horizontal because it is not related to the utility of consumption.

c is incorrect
A perfectly elastic demand curve means that if there is any change in the price of the commodity it would result in an infinite change in the quantity demanded of the commodity. Marginal revenue is defined as the change in total revenue due to an additional sale of the product. In a perfectly competitive market structure, demand is perfectly elastic but it does not explain the horizontal marginal revenue.