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Question

The demand curve for a perfectly competitive firm __________________.

A
slopes downward as the quantity demanded increases as the firm lowers price
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B
is a horizontal, perfectly elastic demand curve at the market price
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C
is a straight, downward sloping curve that is price elastic at higher prices and prices and price inelastic as price falls and approaches zero
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D
both (B) & (C)
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Solution

The correct option is B is a horizontal, perfectly elastic demand curve at the market price

Perfect competition is a type of market where there are huge number of buyers and sellers who deals in the same type of product due to which no individual unit is able to influence the price of the product.

Therefore, the demand curve under perfect competition is a horizontal, perfectly elastic demand curve at the market price because at a uniform price any number of quantity can be sold.


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