Which of the following characterizes a competitive market?
A)A downward-sloping demand curve for the firm.
B)A vertical demand curve facing each firm in the market.
C)Some of the firms sell at a price above the market equilibrium price.
D)A downward-sloping demand curve for the market.

Question

Quizplus · Accepted Answer

In a competitive market, the demand curve for the market as a whole is downward-sloping, indicating that as the price decreases, the quantity demanded increases. This is because there are many firms in the market producing similar products, so consumers have many options to choose from. As a result, any individual firm's demand curve is relatively flat or horizontal, indicating that they have little ability to affect the market price. Choices A and B are not accurate descriptions of a competitive market, and choice C defies the law of supply and demand, as firms would not choose to sell above the market equilibrium price.

Which of the Following Characterizes a Competitive Market