How is the demand curve of a firm under perfect competition?

Horizontal to Ox-axis

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Negatively sloped

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Positively sloped

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U-shaped

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Solution

The correct option is A Horizontal to Ox-axis
The demand curve is horizontal for each of the individual firms in a perfectly competitive market. This is because there are many of them, they each sell the same thing, so if they want to charge more than the prevailing market price, nobody would buy from them.

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