The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-Firms that have downward-sloping demand curves:
A)earn positive economic profits even in the long run.
B)produce homogeneous products.
C)operate in a perfectly competitive market structure.
D)enjoy monopoly or market power.
E)are price takers.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-Firms that have downward-sloping demand curves:
A)earn positive economic profits even in the long run. 
B)produce homogeneous products. 
C)operate in a perfectly competitive market structure. 
D)enjoy monopoly or market power. 
E)are price takers.

Quizplus · Accepted Answer

Firms with downward-sloping demand curves enjoy some level of market power and may have pricing flexibility. This suggests that they are not operating in a perfectly competitive market structure and may be able to earn positive economic profits in the long run. Therefore, the correct option is D.

The Figure Given Below Shows the Aggregate Demand and Supply