The demand schedule or curve confronted by the individual, purely competitive firm is
A) relatively elastic, that is, the elasticity coefficient is greater than unity.
B) perfectly elastic.
C) relatively inelastic, that is, the elasticity coefficient is less than unity.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

In a purely competitive market, the individual firm is a price taker, meaning that it has no control over the price of the product it sells. As a result, the demand curve facing the firm is perfectly elastic, meaning that the firm can sell as much as it wants at the market price, but any attempt to raise the price will result in a complete loss of sales. Therefore, the correct answer is B) perfectly elastic.

The Demand Schedule or Curve Confronted by the Individual, Purely