The demand curve perceived by a perfectly competitive firm
A) shows that such a firm is a price-maker
B) shows economies of scale over a large range of output
C) is horizontal
D) all of the above

Question

Quizplus · Accepted Answer

In a perfectly competitive market, each firm perceives the demand curve as horizontal, indicating that it can sell any quantity of its product at the prevailing market price, thus making it a price-taker, not a price-maker. This does not inherently show economies of scale or indicate that the firm is a price-maker.

The Demand Curve Perceived by a Perfectly Competitive Firm