Question

The market-demand curve for a product in a perfectly competitive market: a. is positively sloped. b....

The market-demand curve for a product in a perfectly competitive market:

a.

is positively sloped.

b.

is horizontal.

c.

is downward sloping.

d.

has elasticity equal to 1.

e.

is vertical.

Homework Answers

Answer #1

Option C is correct

Horizontal demand function is faced by a single firm in the competitive market but the market demand function is usual downward sloping. This is because market demand function is the function of market price and decline in market price will increase the market quantity demanded following the law of demand. But for an individual firm the demand is perfectly elastic since it represents the the market price set for the individual firm by the market.

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