Asked by Erika Overton on May 01, 2024
Verified
The demand curve in a purely competitive industry is ______,while the demand curve to a single firm in that industry is ______.
A) perfectly inelastic;perfectly elastic
B) downsloping;perfectly elastic
C) downsloping;perfectly inelastic
D) perfectly elastic;downsloping
Perfectly Elastic
A situation where a small change in price leads to an infinite change in quantity demanded or supplied, depicted as a horizontal line on a graph.
Perfectly Inelastic
A situation in which the quantity demanded or supplied does not change regardless of changes in price.
- Comprehend the principle of demand elasticity within the context of purely competitive market environments.
- Differentiate between the aggregate demand curve in the market and the demand curve encountered by a single company within a purely competitive environment.
Verified Answer
ZK
Zybrea KnightMay 08, 2024
Final Answer :
B
Explanation :
The demand curve in a purely competitive industry is downsloping, reflecting the overall market demand. However, the demand curve for a single firm in such an industry is perfectly elastic because the firm is a price taker and can sell any quantity at the market price.
Learning Objectives
- Comprehend the principle of demand elasticity within the context of purely competitive market environments.
- Differentiate between the aggregate demand curve in the market and the demand curve encountered by a single company within a purely competitive environment.