Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. The firm depicted in the graph on the right faces a demand curve that is:
A)horizontal at the market price.
B)less than the market demand curve.
C)the same as the marginal cost curve.
D)the same as the market demand curve.

Question

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive.  The firm depicted in the graph on the right faces a demand curve that is:
A)horizontal at the market price. 
B)less than the market demand curve. 
C)the same as the marginal cost curve. 
D)the same as the market demand curve.

Quizplus · Accepted Answer

Perfectly competitive firms face demand curves that are horizontal at the market-determined price.

Assume That All Firms in This Industry Have Identical Cost