In a Price Taker's Market, How Does the Elasticity of the Market

question 144

Multiple Choice

In a price taker's market, how does the elasticity of the market demand curve compare with the elasticity of a single firm's demand curve?

• A) Both demand curves have the same elasticity.
• B) The firm's demand curve is perfectly elastic, while the elasticity of demand at the industry level varies along a downward-sloping curve.
• C) The firm's elasticity of demand varies along a downward-sloping curve, while the industry demand curve is perfectly elastic.
• D) Both demand curves are perfectly elastic.

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