Question

Kermit's massive profits have led to large-scale entry into the housefly industry, placing him in a perfectly competitive market. What shape does the demand curve for the entire market likely take?

A. Downward-sloping
B. Upward-sloping
C. Horizontal
D. Vertical

Answer 1

The demand curve for the entire market in a perfectly competitive market is horizontal (C).

Step-by-step explanation:

The demand curve for the entire market in a perfectly competitive market is horizontal (C).

In a perfectly competitive market, there are numerous buyers and sellers of identical products, and each seller is a price taker, meaning they have no control over the market price. As a result, the demand curve facing the individual firm is perfectly elastic or horizontal.

Since Kermit is operating in a perfectly competitive market, the demand curve for the entire market of houseflies is likely to be horizontal.