Final answer:
The MR curve is horizontal in a perfectly competitive market because the firm is a price-taker, which implies that the market demand is perfectly elastic, and the firm can sell more at the same price. Cartels and monopolies have non-horizontal MR curves because they can influence market prices. The shape of the MR curve is not affected by diminishing marginal returns.
Step-by-step explanation:
The MR curve is horizontal in a perfectly competitive market because each firm is a price-taker. A price-taker is a company that can sell as many units of the good as it wishes at the market price but cannot influence the market price by its own level of production. This situation arises because there are many firms, each contributing a very small fraction to the total market supply, and therefore the actions of any one firm have no significant effect on the market price. The MR curve being horizontal implies that the market demand for this product is perfectly elastic, meaning the firm can sell more at the same price.
In a scenario where a group of firms form a cartel, they act like a monopoly. A monopoly's MR curve is not horizontal because it has market power and faces a downward-sloping demand curve. For monopolistic and perfectly competitive firms, the point where MR equals MC (marginal cost) is critically important for determining output level.
Diminishing marginal returns and the shape of the MC curve can affect the position of the MR curve, but they do not cause the MR curve to be horizontal in a perfectly competitive market.