Question

Explain the economic value of horizontal straight line of a firm

Answer 1

Demand curve or AR curve will be a horizontal straight parallel to the X-axis because positively sloped straight line TR curve passing, through
the origin indicates that price remains constant at all level of output.



(ii) Demand curve will slope downwards from left to right because horizontal TR indicates that TR remains same at levels of output. It is possible only when price falls with rise in output