Which of the following statements is correct?
A)The demand curve for a purely competitive firm is perfectly elastic, but the demand curve for a purely competitive industry is downsloping.
B)The demand curve for a purely competitive firm is downsloping, but the demand curve for a purely competitive industry is perfectly elastic.
C)The demand curves are downsloping for both a purely competitive firm and a purely competitive industry.
D)The demand curves are perfectly elastic for both a purely competitive firm and a purely competitive industry.

Question

Quizplus · Accepted Answer

In a purely competitive market, individual firms face a perfectly elastic demand curve because they are price takers and can sell as much as they want at the market price. However, the industry as a whole faces a downsloping demand curve, reflecting the overall market demand for the product.

Which of the Following Statements Is Correct