If any of the assumptions of perfect competition are violated,
A) supply-and-demand analysis cannot be used to study the industry.
B) graphs with flat demand curves cannot be used to study the firm.
C) graphs with downward-sloping demand curves cannot be used to study the firm.
D) there may still be enough competition in the industry to make the model of perfect competition usable.
E) one must use the monopoly model instead.

Question

Quizplus · Accepted Answer

Even if some of the assumptions of perfect competition are violated, there may still be enough competition in the industry to make the model of perfect competition usable. Supply-and-demand analysis and graphs with either flat or downward-sloping demand curves can still be used to study the firm, but adjustments would need to be made to account for the deviation from perfect competition. The monopoly model would only be necessary if there is a single firm controlling the market.

If Any of the Assumptions of Perfect Competition Are Violated