A perfectly competitive firm faces a demand curve that is
A)horizontal.
B)vertical.
C)perpendicular to the quantity axis.
D)perfectly inelastic.

Question

Quizplus · Accepted Answer

In perfect competition, a firm faces a horizontal demand curve because it is a price taker and must accept the market price for its product. This means that it can sell all output at the market price, and any attempt to charge a higher price would result in no sales. Therefore, the demand curve for a perfectly competitive firm is perfectly elastic, or horizontal at the market price.

A Perfectly Competitive Firm Faces a Demand Curve That Is