Which of the following describes the difference between the market demand curve for a perfectly competitive industry and the demand curve for a firm in this industry?
A)The market demand curve is a horizontal line; the firm's demand curve is downward sloping.
B)The market demand curve is downward sloping; the firm's demand curve is a vertical line.
C)The market demand curve cannot have a constant slope; the firm's demand curve has a slope equal to zero.
D)The market demand curve is downward sloping; the firm's demand curve is a horizontal line.

Question

Quizplus · Accepted Answer

In a perfectly competitive industry, the market demand curve is downward sloping because it reflects the total demand from all consumers at various prices. However, an individual firm in this industry faces a horizontal demand curve at the market price, as it is a price taker and can sell any quantity at that price.

Which of the Following Describes the Difference Between the Market