The elasticity of demand for a particular perfectly competitive firm's output is positively related to the number of firms supplying the market.

Question

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The elasticity of demand for a particular firm's output is not directly related to the number of firms supplying the market. However, in a perfectly competitive market, if there are more firms supplying the market, then the demand curve facing each individual firm becomes more elastic as consumers have more options to choose from. This means that individual firms cannot increase their prices without losing customers to competitors, leading to a focus on cost minimization and potential lower profits.

The Elasticity of Demand for a Particular Perfectly Competitive Firm's