The demand curve faced by firms in a perfectly competitive market is horizontal to reflect the fact that _____.(1 point)
Responses
individual firms offer a differentiated product
individual firms offer a differentiated product
individual firms offer a homogeneous product
individual firms offer a homogeneous product
individual firms are capable of influencing the market price
individual firms are capable of influencing the market price
individual firms are unable to influence the market price
1 answer
The correct response is:
individual firms are unable to influence the market price.
In a perfectly competitive market, individual firms take the market price as given because there are many sellers offering a homogeneous product, and consumers have perfect information. This results in a horizontal demand curve for each individual firm, indicating that they can sell as much as they want at the market price but cannot influence that price by changing their output.
