A purely competitive seller's demand curve for its product is perfectly horizontal because:
A) there is no nonprice competition.
B) the market is difficult to enter and exit.
C) there are other sellers in the firm's market.
D) the firm has no control over the price it receives for its product.

Question

Quizplus · Accepted Answer

In a purely competitive market, individual firms are price takers, meaning they must accept the market price determined by supply and demand. Therefore, the demand curve for a single firm's product is perfectly elastic (horizontal) because any attempt to charge a higher price would result in losing all customers to competitors.

A Purely Competitive Seller's Demand Curve for Its Product Is