Question

Which of the following statements are true of pure competition? Choose one OR MORE: A.The market...

Which of the following statements are true of pure competition?

Choose one OR MORE:

A.The market demand curve and the demand curve facing a firm may be one and the same, at least at certain prices.

B.The demand curve facing a competitive firm consists of a horizontal line at any price equal to or below the market price.

C.The demand curve facing a competitive firm consists of a horizontal line at any price equal to or above the market price.

D.There must be a very large number of sellers.

E.Firms act as price takers.

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Answer #1

D and E are correct. Pure or perfect competition is a market where there are large number of buyers and sellers in the market. Firm are the price takers, as price is influenced by the market force.

A. The market demand curve and the demand curve facing a firm has a certain fixed price or constant.

B. The demand curve facing a competitive firm consists of a horizontal line at any price equal to or at the market price.

C. The demand curve facing a competitive firm consists of a horizontal line at any price equal to or at the market price.

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