Why is the demand curve horizontal for a perfectly competitive firm?
What will be an ideal response?
The demand curve for a perfectly competitive firm is horizontal to reflect the fact that if it raises its price, its sales will drop to zero. The firm has no control over the market price.
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A weakness in the classical economic claim that a recession is caused by a decrease in labor demand curve is
a. that labor demand never changes b. that labor demand increases during a recession c. that labor supply decreases during a recession d. the confusion between a shift of the labor demand curve and a movement along that curve e. the impossibility in the classical model of total spending ever being deficient
The quantity supplied of loanable funds
a. is inversely related to the rate of interest b. is directly related to the rate of interest c. affects a firm's MRP of capital d. affects a firm's MPP of capital e. affects the price of the good