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According to the source, what kind of demand curve does a perfectly competitive firm face for its own product?
AAn upward-sloping demand curve for the firm
BA perfectly elastic curve, flat at the market price
CA downward-sloping curve like the market curve
DA perfectly inelastic curve, vertical in shape
Answer & Solution
Correct answer: B. A perfectly elastic curve, flat at the market price
1. Because the firm must accept the market price and can sell any quantity at that price, buyers will take any number of units from it at that one price.
2. A demand curve that is flat at a single price is a perfectly elastic, horizontal demand curve.
3. This is the firm's own individual demand curve, distinct from the market demand curve, which does slope downward.
4. A vertical demand curve would mean buyers demand a fixed quantity no matter the price, which is not the case here.
_Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.2 | How Perfectly Competitive Firms Make Output Decisions_
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