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Economics miscellaneous

  1. A horizontal demand curve is
    1. ralatively elastic
    2. perfectly inelastic
    3. perfectly elastic
    4. of unitary elasticity
Correct Option: C

The demand curve facing a perfectly competitive firm is flat or horizontal. This is because all firms in perfect competition are by definition selling an identical (homogeneous) product. A horizontal demand curve is a flat curve with a slope of zero. It is a perfectly elastic demand curve. Because the slope of the curve is zero, it is impossible for the price to change in the market.



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