Question

In a perfectly, competitive market, the demand curve of firm is _________.

• A. relatively inelastic
• B. unitary elastic
• C. relatively elastic
• D. infinitely elastic

Answer 1

The correct option is D infinitely elastic

Perfect competition is a type of market where there are large number of buyers and sellers who deals in homogeneous product due to which no individual unit is able to influence the price of the product and the firms have to quote the price that prevails in the market because of the customer's knowledge about the price.

The demand curve is perfectly elastic because at the prevailing quantity any number of quantity can be bought and sold.