The demand schedule or curve confronted by the individual,purely competitive firm is:

A) relatively elastic,that is,the elasticity coefficient is greater than unity.
B) perfectly elastic.
C) relatively inelastic,that is,the elasticity coefficient is less than unity.
D) perfectly inelastic.

Question

Vanessa Orozco · Accepted Answer

Final Answer : B, Explanation :  The demand curve faced by a purely competitive firm is perfectly elastic because the firm is a price taker and must accept the market price for its output. The firm cannot influence the market price by changing its own output level. As a result, the firm can sell as much output as it wants at the market price, but cannot charge a higher price without losing all its customers to competitors. Therefore, the demand curve or schedule is a horizontal line at the market price.

The demand schedule or curve confronted by the individual,purely competitive firm is:

A) relatively elastic,that is,the elasticity coefficient is greater than unity.
B) perfectly elastic.
C) relatively inelastic,that is,the elasticity coefficient is less than unity.
D) perfectly inelastic.

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Learning Objectives

Related questions

The demand schedule or curve confronted by the individual,purely competitive firm is:A) relatively elastic,that is,the elasticity coefficient is greater than unity.B) perfectly elastic.C) relatively inelastic,that is,the elasticity coefficient is less than unity.D) perfectly inelastic.

Definitions

Learning Objectives

Learning Objectives

Related questions

The demand schedule or curve confronted by the individual,purely competitive firm is:

A) relatively elastic,that is,the elasticity coefficient is greater than unity.
B) perfectly elastic.
C) relatively inelastic,that is,the elasticity coefficient is less than unity.
D) perfectly inelastic.