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If an employer does not sell its output in a perfectly competitive industry, it faces a ________ demand curve for output.

Sagot :

If an employer does not sell its output in a perfectly competitive industry, it faces a horizontal demand curve for output.

According to economic theory, perfect competition exists when all businesses sell the same goods, market share has no bearing on prices, businesses can enter or quit the market without any obstacles, consumers have perfect or complete information, and businesses are unable to set prices.

The demand and supply in the industry as a whole affect the price. Due to its limited supplier size and lack of price control, the company cannot set prices. Each additional product will be sold for the same price. Price, which is represented by fully elastic demand, is therefore equal to MR times AR (ie a horizontal curve).

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