The demand curve for each seller's product in perfect competition is horizontal at the market price because
A) each seller is too small to affect the market price.
B) the price is set by the government.
C) all the sellers get together and set the price.
D) all the demanders get together and set the price.
Answer: A
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If a monopolist owns or controls a key resource necessary for production, it is a source of:
A) legal market power. B) natural market power. C) regulated market power. D) restricted market power.
Brian is paid monthly and typically takes $500 of his pay in cash to spend throughout the month, and the rest he leaves in an interest-bearing checking account. With the recent inflation, Brian finds it necessary to go to the bank every week, withdrawing $125 each time, so that his money can earn interest for as long as it can before Brian needs to withdraw it. The added hassle of going to the bank more often in response to inflation is called a:
A. tax distortion. B. transactions cost. C. shoe-leather cost. D. menu cost.