Question

In perfect competition, the demand faced by a single firm is perfectly rev: 06_26_2018 Multiple Choice elastic, because the firm produces a differentiated product. inelastic, because many other firms produce the same standardized product. elastic, because many other firms produce the same standardized product. inelastic, because the firm produces a differentiated product.

Answer 1

Answer:

elastic, because many other firms produce the same standardized product

Explanation:

A good has perfect price elasticity when a change in price leads to an infinite change of quantity demanded.

A perfect competition is when there are many buyers of homogenous goods and services. The sellers are price takers; prices are set by the market force.

A perfect competition has perfect price elasticity because goods sold are standardised and identical with other goods in the market. If the seller increases its price, it's demand would fall to zero as consumers would shift demand to other subsituite goods.

I hope my answer helps you.