Firms in perfect competition face a?
Correct answer: A. perfectly elastic demand curve
- A. perfectly elastic demand curve
- B. perfectly inelastic demand curve
- C. perfectly elastic supply curve
- D. perfectly inelastic supply curve
Explanation
An individual perfectly competitive firm is too small to affect the market price, so it faces a horizontal, perfectly elastic demand curve at that price. The market demand curve itself is not perfectly elastic.
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About Microeconomics
Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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