Scenario 9.2
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
-Which of the following faces a horizontal demand curve?

Question

Quizplus · Accepted Answer

A perfectly competitive firm is known to face a horizontal demand curve. This means that the firm cannot influence the price of the product it sells and has to accept the prevailing market price. In this scenario, since the firm is publicly held, it can be assumed that there is a large number of buyers and sellers in the market, making it highly competitive and resulting in a perfectly elastic demand curve for the firm.

Scenario 9.2 Consider a Publicly Held Firm (One Whose Stock Shares Are