Assume That All Firms in This Industry Have Identical Cost

question 70

Multiple Choice

Assume that all firms in this industry have identical cost curves, and that the market is perfectly competitive. The firm depicted in the graph on the right faces a demand curve that is:

• A)horizontal at the market price.
• B)less than the market demand curve.
• C)the same as the marginal cost curve.
• D)the same as the market demand curve.

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Definitions:

Commercially Viable

Describes a product, service, or business that can generate enough revenue to cover its costs and yield a profit.

Federal Law

Legislation passed by the national government of the United States that applies throughout the country.

Creative Destruction

The hypothesis that the creation of new products and production methods destroys the market power of existing monopolies.

Dominant Firms

Companies that have a major share of sales in a specific market, significantly influencing that market's dynamics.