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Question
Price elasticity of demand for individual firm is perfectly elastic. This is feature of _____________.
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Solution
The correct option is B perfect competition
The demand curve under
perfect competition is a horizontal
line parallel to x-axis which means that the price of the commodity remains the
same and any amount of quantity can be sold at this prevailing price in the
market but a little variation in the price will lead to a fall in demand to
zero. Therefore, demand is perfectly elastic in perfect competition.
The demand curve under perfect competition is a horizontal line parallel to x-axis which means that the price of the commodity remains the same and any amount of quantity can be sold at this prevailing price in the market but a little variation in the price will lead to a fall in demand to zero. Therefore, demand is perfectly elastic in perfect competition.
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