A few sellers may behave as if they operate in a perfectly competitive market if the market demand is:
A) highly inelastic.
B) very elastic.
C) unitary elastic.
D) composed of many small buyers.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, sellers face a very elastic demand curve because consumers have many substitutes and can easily switch from one seller to another if the price increases. This means that sellers have little to no power to set prices above the market equilibrium, as doing so would result in losing nearly all their customers to competitors.

A Few Sellers May Behave as If They Operate in a Perfectly