In competitive markets, the demand curve faced by the individual firm is:
A) equal to the market demand curve.
B) perfectly elastic.
C) perfectly inelastic.
D) downward sloping.

Question

Quizplus · Accepted Answer

In competitive markets, the individual firm is a price taker, meaning that it has no control over the market price. The market demand curve represents the total demand for the product in the market, and the individual firm's demand curve is perfectly elastic at the market price. This means that the firm can sell as much or as little of the product as it wants at the market price.

In Competitive Markets, the Demand Curve Faced by the Individual