Graph 17-1
-Refer to Graph 17-1.The firm depicted in panel b faces a horizontal demand curve.If panel b depicts a profit-maximising firm:

Question

Graph 17-1 
-Refer to Graph 17-1.The firm depicted in panel b faces a horizontal demand curve.If panel b depicts a profit-maximising firm:

Quizplus · Accepted Answer

A firm facing a horizontal demand curve suggests it is a price taker in a perfectly competitive market, not a monopolistically competitive one. It cannot choose its selling price and will adjust its output to where price equals marginal cost, potentially operating without excess capacity if earning zero economic profit.

Graph 17-1 -Refer to Graph 17-1.The Firm Depicted in Panel B Faces