When a seller has no market power, its demand curve
A)is horizontal.
B)is vertical.
C)has a negative slope.
D)has a positive slope.

Question

Quizplus · Accepted Answer

When a seller has no market power, it means that they are a price taker and have to accept the market price. This results in a perfectly elastic demand curve, which is horizontal. This is because any increase in price would cause consumers to switch to a substitute product, and any decrease in price would cause an increase in demand, leading to no change in total revenue for the seller.

When a Seller Has No Market Power, Its Demand Curve