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If consumers view the output of any firm in a market to be identical to the output of any other firm in the market and the market has many firms and transaction costs are​ low, the demand curve for the output of any given firm A. will be vertical. B. will be horizontal. C. will be identical to the market demand curve. D. cannot be determined from the information given.

User Gyula
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Answer:

B. will be horizontal

Step-by-step explanation:

A type of market where output is identical to the output of any other firm in the market and the market has many firms and transaction costs are​ low is the perfect competition.

The demand curve is horizontal because in this type of market, price is set by the forces of demand and supply. Buyers are sellers are price takers and they don't have any influence over prices. At the going market price, sellers sell all the quantities of their products.

But if they attempt to increase price, quanitity demanded would fall to zero as consumers would easily shift to other sellers. Also, there would be no incentive to reduce price because they would be earning a loss.

I hope my answer helps you

User Takiya
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