Asked by Waseem Nazir on May 07, 2024
Verified
If any of the assumptions of perfect competition are violated,
A) supply-and-demand analysis cannot be used to study the industry.
B) graphs with flat demand curves cannot be used to study the firm.
C) graphs with downward-sloping demand curves cannot be used to study the firm.
D) there may still be enough competition in the industry to make the model of perfect competition usable.
E) one must use the monopoly model instead.
Perfect Competition
A market structure characterized by a large number of small firms, identical products, and free entry and exit which leads to firms selling at the market price.
Demand Curves
Graphical representations showing the relationship between the price of a good and the quantity demanded, assuming other factors remain constant.
Monopoly Model
An economic model describing a market where a single seller controls the market supply of a product which has no close substitutes.
- Acquire knowledge about the attributes and underlying assumptions of perfectly competitive markets.
- Acquire knowledge about the influence of market structure on the welfare of consumers and the efficiency within markets.
Verified Answer
AG
Aryan GulsiaMay 12, 2024
Final Answer :
D
Explanation :
Even if some of the assumptions of perfect competition are violated, there may still be enough competition in the industry to make the model of perfect competition usable. Supply-and-demand analysis and graphs with either flat or downward-sloping demand curves can still be used to study the firm, but adjustments would need to be made to account for the deviation from perfect competition. The monopoly model would only be necessary if there is a single firm controlling the market.
Learning Objectives
- Acquire knowledge about the attributes and underlying assumptions of perfectly competitive markets.
- Acquire knowledge about the influence of market structure on the welfare of consumers and the efficiency within markets.