Demand Curve In Perfect Competition:

Following from the assumption that all firms are price-takers, the demand curve facing each firm in perfect competition is horizontal i.e. perfectly price elastic as shown in Figure .

Figure: The Demand Curve for a Perfectly Competitive Firm

Figure shows that the firm can sell all it wishes to at the prevailing market price, and that price or average revenue (AR) is constant and it is equal to marginal revenue (MR) because the sale of additional units does not require lowering of price.