Demand curve of a firm under perfect competition is _____.

perfectly Inelastic

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perfectly Elastic

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more Elastic

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less Elastic

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Solution

The correct option is C perfectly Elastic
If demand is perfectly elastic, it means that at a certain price demand is infinite (A good with a very high elasticity of demand). In other words if a firm increased price by 1%, it would see all its demand evaporate. If demand is perfectly elastic, then demand will be horizontal.

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Similar questions

Why is the demand curve of a firm under monopolistic competition more elastic than under monopoly? Explain.

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