-Refer to the above figure. The market supply and demand curves in a perfectly competitive market intersect at $4. Which of the graphs represent the situation for an individual firm?

Question

Quizplus · Accepted Answer

Panel C represents the situation for an individual firm in a perfectly competitive market. In such a market, individual firms are price takers, meaning they accept the market price determined by the intersection of market supply and demand. The horizontal line at the market price of $4 in Panel C illustrates this, showing that the firm can sell any quantity at the market price but does not have the power to set the price itself.

-Refer to the Above Figure