The Demand Curve in a Purely Competitive Industry Is ______

question 206

Multiple Choice

The demand curve in a purely competitive industry is ______, while the demand curve to a single firm in that industry is ______.

• A)perfectly inelastic; perfectly elastic
• B)downsloping; perfectly elastic
• C)downsloping; perfectly inelastic
• D)perfectly elastic; downsloping

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Definitions:

Income Elasticity

A measure of how the demand for a good or service changes in response to changes in consumer income, indicating whether a good is a luxury or a necessity.

Price Elasticity

The measure of responsiveness of the quantity demanded or supplied of a good to a change in its price.

Supply

The total amount of a good or service available for purchase at any given price.

Inelastic Demand

A situation where the quantity demanded of a good or service changes little when its price changes.