Option 1: Horizontal straight line -> Under perfect competition, firms are price takers and face a constant market price, making AR curve horizontal.
Option 2: Vertical straight line -> This would indicate infinite price changes at same quantity, which doesn't represent AR behavior.
Option 3: Rectangular hyperbola -> This shape represents unit elastic demand, not the AR curve under perfect competition.
Option 4: Downward to the right -> This represents AR curve under imperfect competition (monopoly), not perfect competition.
Hence, Option 1: Horizontal straight line -> Under perfect competition, a firm is a price taker and cannot influence the market price. Since Average Revenue (AR) equals Price, and price remains constant at all output levels for a perfectly competitive firm, the AR curve is a horizontal straight line parallel to the X-axis at the level of the prevailing market price. This also means AR = MR = Price under perfect competition. -> correct