An increase in the price a pure competitor can receive for its product would cause:
A) the seller's horizontal demand curve to shift upward.
B) the seller to move to the left on its horizontal demand curve.
C) the seller's downward-sloping demand curve to shift to the right.
D) the seller to move upward on its downward-sloping demand curve.

Question

Quizplus · Accepted Answer

In a pure competition market structure, each firm faces a perfectly elastic demand curve for its product, meaning the demand curve is horizontal at the market price. An increase in the price a firm can receive for its product would visually appear as the entire horizontal demand curve shifting upward, not a movement along the curve.

An Increase in the Price a Pure Competitor Can Receive