Explain the difference between the demand curve faced by individual firm in a purely competitive market...
Explain the difference between the demand curve faced by individual firm in a purely competitive market and the demand curve faced by the industry. Use examples if possible
Homework Answers
Answer : The difference between industry demand curve and the individual firm's demand curve in purely competitive market is following :
In purely competitive market the industry demand curve is downward sloping. This means that in purely competitive market if price rise then quantity demanded fall and if price fall then quantity demanded increase. For example; when price of chocolate rise then the quantity demanded for chocolate decrease and vise versa. This means that the demand curve for chocolate industry is downward sloping.
In purely competitive market the individual firm's demand curve is horizontal. This means that the demand curve for individual firm in purely competitive market is perfectly elastic. For example; if the price of pizza rise then the quantity demanded decrease infinitely and if price fall for pizza then the quantity demanded increase infinitely. This means that the demand curve for individual pizza firm is perfectly elastic.
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the
demand curve faced by a perfectly competitive firm is
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demand curve faced by a perfectly competitive firm is
horizontal
yes
it a true or false question
Class Name Chapter 8 -Micro Indicate whether the statement is true or false. 1. The behaviour of an individual perfectly competitive firm has a definite influence o a. True b. False Tee e a. True b. False 6. The market demand curve in a perfectly competitive industry is downward sl individual perfectly competitive firm is horizontal a. True b. False 7. To...
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