The Demand Curve for the Output of a Perfectly Competitive

question 47

Multiple Choice

The demand curve for the output of a perfectly competitive firm is

• A)perfectly inelastic
• B)perfectly elastic
• C)unit elastic
• D)downward sloping
• E)nonlinear

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Definitions:

Government Intervention

Actions taken by a government to affect or control various aspects of the economy, such as regulations, subsidies, tariffs, and taxes to correct market failures and promote economic stability.

Regulatory Capture

A situation where regulatory agencies are dominated by the industries they are supposed to be regulating, leading to decision making that benefits the industry at the expense of the public good.

Economic Efficiency

A situation in which it is not possible to improve overall economic welfare by reallocating resources amongst individuals, implying no waste is occurring.

Deregulated Industry

An industry where government restrictions on business operations, such as price controls and market entry, have been reduced or eliminated.