Question

The market demand curve in perfect competition is found by A. the interaction of supply and demand at the individual firm and consumer levels. B. horizontally summing the demand curves of the individual consumers. C. utility maximizing behavior of the​ "representative consumer." D. horizontally summing the supply curves of the individual firms in the industry.

Answer 1

b

Step-by-step explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.

In the long run, firms earn zero economic profit. If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.

the demand curve is a graph of the quantity demanded on the vertical axis and the price on the horizontal axis. it is downward sloping

market demand curve is the aggregation of demand curves

Because goods are identical, market demand curve can be determined by horizontally summing the demand curves of the individual consumers