The market demand curve in a perfectly competitive market is ________ and the demand curve for a perfectly competitive firm's output is ________.
A) downward sloping; downward sloping
B) downward sloping; horizontal
C) horizontal; downward sloping
D) horizontal; horizontal
E) downward sloping; upward sloping

Question

Quizplus · Accepted Answer

The market demand curve in a perfectly competitive market is downward sloping, reflecting the overall market's decreasing willingness to pay as quantity increases. However, the demand curve for a single firm's output in such a market is horizontal, indicating that the firm can sell any quantity of its product at the prevailing market price due to its small size relative to the market.

The Market Demand Curve in a Perfectly Competitive Market Is