Which of the Following Statements Is Correct

question 1

Multiple Choice

Which of the following statements is correct?

• A) The demand curve of the perfectly competitive industry is elastic as are the demand curves facing the individual firms.
• B) The market demand curve of perfect competition is inelastic because the individual consumers are buying a homogeneous product.
• C) The market demand curve of the perfectly competitive industry is downward sloping while the demand curve of an individual firm is horizontal with a height equal to the product price.
• D) The market demand curve of the perfectly competitive industry is downward sloping, so the demand curves of the individual firms are also downward sloping.

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Definitions:

Prices of Capital

The cost associated with obtaining capital goods, such as machinery and equipment used in production.

Prices of Labor

The wages or compensation provided to workers for their labor or services.

Isocost Line

A graph that shows all possible combinations of inputs that can be purchased with a given total cost.

Price of Capital

The cost of using capital resources, such as equipment or buildings, often reflected in interest rates or rental prices.