Answered

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Because a perfectly competitive firm cannot raise price (it will lose all of its customers if it does) and has no incentive to cut price (it can sell all it wants at the market price), the demand curve it faces is:

A. elliptical
B. vertical
C. horizontal

Sagot :

GinnyAnswer

Final answer:

In perfect competition, firms face a horizontal and perfectly elastic demand curve, becoming price takers in the market.


Explanation:

In a perfectly competitive market, a firm faces a horizontal demand curve at the market price. This means that the firm can sell any quantity at the prevailing market price as it has no control over setting prices.

This demand curve is perfectly elastic, indicating that buyers are willing to purchase any quantity at the market price.

Individual firms in perfect competition become price takers as they must accept the equilibrium price set by market forces.


Learn more about Perfect competition in Economics here:

https://brainly.com/question/38142365


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