135k views
0 votes
With the demand curve for diamonds being downward sloping, what can be concluded about company A in terms of market structure? Is company A a firm in a perfectly competitive^1 market or something else?

User Jparimaa
by
8.6k points

1 Answer

6 votes

Final answer:

The downward-sloping demand curve suggests that Company A is not in a perfectly competitive market, as it indicates some degree of market power and competition.

Step-by-step explanation:

In terms of market structure, the downward-sloping demand curve for diamonds suggests that Company A is not in a perfectly competitive market. A perfectly competitive market is characterized by a flat or perfectly elastic demand curve, meaning that the firm can sell any quantity at the prevailing market price. In contrast, a downward-sloping demand curve indicates that Company A has some degree of market power and faces competition, but it is not the only firm in the market.

User Elementstyle
by
8.3k points
Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories