In a purely competitive market,a company views its demand curve as
A)completely price insensitive.
B)horizontal (flat).
C)vertical.
D)convex.

Question

Quizplus · Accepted Answer

In a purely competitive market, there are numerous firms producing identical products and there are no barriers to entry or exit. Therefore, each firm is a price taker and has no control over the market price. As a result, the demand curve for a single firm is perfectly elastic, meaning it is horizontal or flat at the market price. Any attempt by the firm to increase the price above the market price will result in no sales because consumers will simply switch to a competitor selling at the market price.

In a Purely Competitive Market,a Company Views Its Demand Curve