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A perfectly competitive firm's demand curve is perfectly elastic at the market-determined price.
Perfectly Competitive
A market structure characterized by many buyers and sellers, free entry and exit, homogenous products, and perfect information, leading to firms being price takers.
Demand Curve
A visual representation indicating the link between the price of an item and the quantity of it that buyers seek.
Market-determined Price
The price of a good or service as dictated by the forces of supply and demand in a competitive market, without external interventions.
- Understand the function of market prices in shaping the supply decisions of a firm.
- Acknowledge the properties of perfectly competitive markets, notably the simplicity of entry and product homogeneity.
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Learning Objectives
- Understand the function of market prices in shaping the supply decisions of a firm.
- Acknowledge the properties of perfectly competitive markets, notably the simplicity of entry and product homogeneity.
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