Asked by Ashley Friend on May 06, 2024
Verified
The demand curve facing a perfectly competitive firm is
A) the same as the market demand curve.
B) downward-sloping and less flat than the market demand curve.
C) downward-sloping and more flat than the market demand curve.
D) perfectly horizontal.
E) perfectly vertical.
Demand Curve
A graphical representation of the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.
- Familiarize yourself with the mechanisms through which companies in perfectly competitive markets decide on prices and amounts of output.
- Interpret demand curves and how they affect the pricing and output decisions of perfectly competitive firms.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
D
Explanation :
In a perfectly competitive market, a firm is a price-taker, meaning it cannot influence the market price. Therefore, the demand curve facing a perfectly competitive firm is perfectly horizontal, as any increase in price would result in the loss of all customers to other firms in the market.
Learning Objectives
- Familiarize yourself with the mechanisms through which companies in perfectly competitive markets decide on prices and amounts of output.
- Interpret demand curves and how they affect the pricing and output decisions of perfectly competitive firms.