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1. Identify the market structure that is represented by their curve in the diagram.  2. Explain why the AR curve is horizontal

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1. Identify the market structure that is represented by their curve in the diagram. 

2. Explain why the AR curve is horizontal

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1. Perfect competition 

2. It is assumed that under perfect competition compared to the industry the share of each firm is meager. No firm can influence the market supply. So even if a firm doubles the quantity supplied the market supply will not change. The price remains the same. So the AR or the demand curve is horizontal.

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