The demand curve for a perfectly competitive firm
A)slopes downward as the quantity demanded increases as the firm lowers price
B)is a horizontal, perfectly elastic demand curve at the market price
C)is a straight, downward sloping curve that is price elastic at higher prices and price inelastic as price falls and approaches zero
D)both (b) and (c)

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each firm faces a horizontal demand curve at the market price, indicating that the firm can sell any quantity of its product at the prevailing market price, thus making the demand curve perfectly elastic.

The Demand Curve for a Perfectly Competitive Firm