Answer to Question #181960 in Macroeconomics for James

Question

QUESTION 9

A firm in perfect competition faces a perfectly elastic demand curve for its product:

1. The firm’s demand curve is a horizontal line at the market price level.
2. The firm’s demand curve is a horizontal line at the variable cost level.
3. The firm’s demand curve no longer exists.
4. All of the above.
5. None of the above. 

QUESTION 10

Because a perfectly competitive firm is a price taker:

1. It takes all of the prices it can get.
2. It takes more than its fair share of prices.
3. It can sell any quantity at the market-determined price.
4. It can sell only the necessary quantity at the market-determined price.
5. It can sell any quantity at any price that it chooses.

Answer 1

1. The firm’s demand curve is a horizontal line at the variable cost level.
2. It can sell any quantity at the market-determined price.