-Refer to the above figure. Which of the following statements is TRUE about the demand curves for an individual firm in a perfectly competitive industry and a monopoly?
A) Panel A is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly.
B) Panel C is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly.
C) Panel C is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly.
D) Panel B is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly.

Question

-Refer to the above figure. Which of the following statements is TRUE about the demand curves for an individual firm in a perfectly competitive industry and a monopoly?
A) Panel A is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly. 
B) Panel C is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly. 
C) Panel C is the demand curve for a perfectly competitive firm and panel B is the demand curve for a monopoly. 
D) Panel B is the demand curve for a perfectly competitive firm and panel A is the demand curve for a monopoly.

Quizplus · Accepted Answer

In a perfectly competitive market, an individual firm faces a perfectly elastic demand curve, meaning it can sell any quantity of its product at the prevailing market price, represented by a horizontal line as in Panel C. A monopoly, on the other hand, faces the market demand curve, which is downward sloping, indicating that it can influence the market price by altering the quantity supplied, as shown in Panel B.

-Refer to the Above Figure