Q.Under perfect competition, the average revenue (AR) curve of an individual firm is:

A perfectly competitive firm is a price-taker, so it sells every unit at the same market price.

A perfectly competitive firm cannot influence the market price; it sells any quantity at the single ruling price. Since $AR = TR/Q = P$ and price is constant, average revenue is the same at every output, so the AR curve is a horizontal straight line at the market price (and coincides with the MR curve).

• (a) downward sloping — this is AR under imperfect competition, where price must be cut to sell more; not the competitive case.
• (b) a horizontal straight line — correct: constant price means constant AR.
• (c) upward sloping — describes the supply curve, not a revenue curve.
• (d) U-shaped — describes average cost, not average revenue.

Confusing the individual firm's horizontal AR curve with the industry's downward-sloping market demand curve. Mixing up the U-shaped average cost curve with the average revenue curve.