The demand curve of the firm under perfect competition is ____________
Right Answer is: C
Perfect competition- It is a theoretical market structure where Markets have no influence on prices:
• All firms are price takers
• The product is Identical
• Buyers and sellers have perfect information,
• Firms can freely enter or exit the market
• Resources for labours are mobile etc.
• All goods in a perfect competition are considered as perfect substitutes.
• The Demand Curve of the firm under perfect competition is perfectly elastic.
• If one firm tries to raise its price, consumers would buy the goods from another firm not cheaper prices.
• Hence, these firms are price takers.