If the Demand Curve Faced by a Firm Is Horizontal

question 21

Multiple Choice

If the demand curve faced by a firm is horizontal, then the firm is ________ and a ________.

• A) perfectly competitive; price taker
• B) perfectly competitive; price maker
• C) a monopoly; price taker
• D) monopoly; price maker

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Definitions:

Portfolio

A collection of investments held by an individual or institution, including stocks, bonds, commodities, and other financial instruments.

Stock T

A hypothetical or generic stock used in financial examples or educational contexts to explain stock market concepts.

Common Stock

A type of security that represents ownership in a corporation, includes voting rights, and entitles the holder to dividends.

Recession

A temporary phase of economic downturn characterized by decreased trade and industrial activity, typically recognized by a decline in the Gross Domestic Product (GDP) for two consecutive quarters.