In a perfectly competitive market, a decrease in the market demand will shift the perfectly competitive firm's______ curve______ .

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the individual firm is a price taker and the market demand curve is the demand curve facing the firm. Therefore, a decrease in the market demand curve will lead to a decrease in the demand for the firm's product, which will shift the firm's demand curve downward. The marginal cost curve is not influenced by changes in market demand, so option A is incorrect. Similarly, an upward shift in the demand curve would imply an increase in demand for the firm's product, so option B is also incorrect.

In a Perfectly Competitive Market, a Decrease in the Market