Question

If the market demand curve for a good in a perfectly competitive market is inelastic, we can conclude...

A. the demand curve faced by an individual firm in the market is inelastic.
B. the market supply curve is elastic.
C. the market supply curve is inelastic.
D. the demand curve faced by an individual firm is completely elastic.
E. the supply curve of the individual firm is completely inelastic.

**not sure :( thank you!!

Answer 1

I don't think we can say anything about supply

Answer 2

okay, so it's between A and D then?

Answer 3

yeah

Answer 4

so if the competitive market is inelastic, does that mean the individual one would have to be inelastic as well?

Answer 5

not sure

Answer 6

so not sure, do you know whether it would be A or D?

Answer 7

here you go

https://www.boundless.com/economics/textbooks/boundless-economics-textbook/competitive-markets-10/perfect-competition-66/the-demand-curve-in-perfect-competition-249-12346/

Answer 8

oh so it's saying that it would be opposite? so in this case, the market is inelastic, so the individual firm should be elastic? so choice D ?

Answer 9

it turns out it doesn't matter what the market is doing

with perfect competition, the demand will be perfectly elastic

Answer 10

oh so it will always be perfectly elastic, no matter what?

Answer 11

why? because ANY price increase will make any rational buyer go somewhere else (since all the products are the same, why not go for the cheaper version?)

Answer 12

remember there are lots of firms to choose from in a perfectly competitive market

Answer 13

ohh okay, makes sense :) thank you!!

Answer 14

I should clarify

with perfect competition, the demand for an individual firm will be perfectly elastic

Answer 15

okay, so the answer in this case would be D?

Answer 16

yeah

Answer 17

and by "completely" they mean "perfectly" right?

Answer 18

and okay yay!

Answer 19

yeah based on the perfect competition

Answer 20

awesome, thank you!!