Question

Assertion (A):
The demand curve under perfect competition is perfectly elastic.
Reason (R):
Under perfect competition, firms are price takers and can sell any quantity at prevailing market price.

• A. Both (A) and (R) are correct and (R) is the correct explanation of (A)
• B. Both (A) and (R) are correct but (R) is not the correct explanation of (A)
• C. (A) is correct but (R) is not correct
• D. (A) is not correct but (R) is correct

Hint:

Logic Tip: Under perfect competition, AR = MR = Price and demand curve is horizontal.

Answer 1

The Correct Option is A

Step 1:
A perfectly competitive firm cannot influence market price.

Step 2:
The firm accepts prevailing market price determined by market forces. It can sell any quantity at that price.

Step 3:
Because price remains constant, firm's demand curve becomes: \[ \boxed{\text{Perfectly Elastic}} \] Thus, the reason correctly explains the assertion.

Step 4:
Hence, the correct answer is: \[ \boxed{\text{(1)}} \]