Question

In a perfectly competitive market with 100 identical firms producing at market price p1 A. the supply curve is more elastic than if there were only 50 identical firms. B. the supply curve is flatter than if there were only 50 identical firms. C. the firms have identical marginal costs. D. All of the above.

Answer 1

D

Step-by-step explanation:

A. The supply curve is more elastic with 100 firms than with 50 because if there are more firms then each one have less market power and for instance they are more sensible to price changes.

B. Because the supply curve is more elastic it looks more flatter. This means that a small change in price will traduce in a greater responde in the quantity supplied.

C. In a perfectly competitive market firms sell an homogeneous product then all of them face identical marginal costs.