A perfectly competitive firm has
A)A perfectly elastic demand curve
B)A perfectly elastic supply curve
C)A downward sloping demand curve
D)A downward sloping supply curve

Question

Quizplus · Accepted Answer

A perfectly competitive firm is a price taker, meaning the firm has no control over the price of its product. Therefore, the demand curve facing a perfectly competitive firm is perfectly elastic, as any increase in price would cause consumers to switch to a substitute product offered by another firm.

A Perfectly Competitive Firm Has