Identify the incorrect option from the following related to a perfectly competitive market.

Firm's total revenue curve is a straight line horizontally.

The correct answer is Option (4) → Firm's total revenue curve is a straight line horizontally.

Option 1: The firm's average revenue is equal to the market Price. Correct. In perfect competition, a firm is a price taker. The price at which it sells each unit is the market price.

• Average Revenue (AR) = Total Revenue (TR) / Quantity (Q) = (Price * Quantity) / Quantity = Price.

• So, AR = Price. 

Option 2: The price line shows the relationship between the market price and a firm's output level. Correct. In perfect competition, the individual firm faces a perfectly elastic demand curve at the market price. This means the firm can sell any quantity at the given market price. The price line (which is also the firm's AR and MR curve) is a horizontal line at the market price, indicating that the market price remains constant regardless of the firm's output level.

Option 3: Marginal revenue equals the market price.Correct. Marginal Revenue (MR) is the additional revenue from selling one more unit. Since the price is constant for a perfectly competitive firm, each additional unit sold adds the market price to total revenue.

Option 4: Firm's total revenue curve is a straight line horizontally. False. The total revenue (TR) curve is not a horizontal line. It is a positively sloped straight line, showing that total revenue increases linearly with output (TR = Price × Quantity). A horizontal total revenue curve would imply that total revenue stays the same regardless of output, which is incorrect in a perfectly competitive market.