A horizontal demand curve for a firm implies that
A) the firm is a monopoly.
B) the market the firm is operating in is not competitive.
C) the firm is selling in a competitive market.
D) the products of that firm are very different from other firms' products.

Question

Quizplus · Accepted Answer

A horizontal demand curve indicates that the firm is able to sell all of its output at the same price, regardless of the quantity produced. This implies that the firm is operating in a perfectly competitive market, where there are many buyers and sellers and all firms sell an identical product. In such a market, each firm is a price taker and has no market power to influence the price.

A Horizontal Demand Curve for a Firm Implies That