What makes the demand curve of the perfectly competitive firm uniquely different from that of firms in other kinds of market structures?
The perfectly competitive firm's demand curve is horizontal, which means it can sell as much as it wants at the market price. This is possible because each firm under perfect competition is so insignificant relative to the market as a whole that it has no influence over price; it is a price taker.
You might also like to view...
Do government bureaucracies misallocate resources? If so, how and why? Can you list one possible way to limit the negative effects of special interests such as bureaucracies?
What will be an ideal response?
Which of the following statements concerning the distinction between positive and normative economics is TRUE?
A) Positive statements are concerned with what is, while normative statements are concerned with what someone thinks should be. B) Positive statements are concerned with what people think, while normative statements are concerned with what people do. C) Positive statements are true while normative statements are false. D) Positive statements are concerned with what is while normative statements are concerned with what will be.