Question : The demand curve facing a perfectly competitive firm:
Option 1: downward sloping
Option 2: perfectly inelastic
Option 3: a concave curve
Option 4: perfectly elastic
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Correct Answer: perfectly elastic
Solution : The correct option is perfectly elastic .
A completely competitive company faces a perfectly elastic demand curve, meaning its slope is zero. In other words, at the market price, the demand curve is a horizontal line. This is because, in a market with perfect competition, every business is a price taker and is free to offer any number of its goods for sale at the going rate.
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