The perfect competitor's demand and marginal revenue curves are (LO5) a) identical only in the long run b) identical only in the short run c) never identical d) always identical

In a perfect competition, since the product is homogeneous and there are many sellers, the demand curve faced by each firm is horizontal or perfectly elastic at the market-determined price. This means that the firm can sell any quantity of the product at the given market price without affecting the price. As for the marginal revenue, it is the additional revenue a firm earns by selling one more unit. In a perfectly competitive market, as the firm can sell any quantity at the prevailing market price, every additional unit sold brings in the same amount of revenue as the previous one. Therefore, marginal revenue remains constant.

Now, let's analyze each alternative and determine which one is correct: a) Identical only in the long run: This option suggests that the demand curve and the marginal revenue curve are only identical in the long run. However, as we discussed in step 1, the demand curve and marginal revenue curve are the same in both short run and long run in perfect competition. Thus, this option is incorrect. b) Identical only in the short run: This option suggests that the demand curve and the marginal revenue curve are the same only in the short run. However, as discussed previously, they are the same in both short run and long run under perfect competition. So, this option is incorrect. c) Never identical: This alternative says that the demand curve and marginal revenue curve are never the same. However, as we discussed in step 1, they are the same in perfect competition. Thus, this alternative is incorrect. d) Always identical: As we have established in step 1, in a perfectly competitive market, the demand curve and the marginal revenue curve are the same for a firm. Therefore, this alternative is correct.

Based on our analysis in step 2, the correct option is: d) Always identical