QuestionAugust 1, 2025

A wheat farmer and a firm in a perfectly competitive market are similar in that A. both will earn an economic profit if their total revenue equals their total cost. B. both face vertical demand curves. C. both have to lower their prices if a rival firm lowers its price. D. both face horizontal demand curves.

A wheat farmer and a firm in a perfectly competitive market are similar in that A. both will earn an economic profit if their total revenue equals their total cost. B. both face vertical demand curves. C. both have to lower their prices if a rival firm lowers its price. D. both face horizontal demand curves.
A wheat farmer and a firm in a perfectly competitive market are similar in that
A. both will earn an economic profit if their total revenue equals their total cost.
B. both face vertical demand curves.
C. both have to lower their prices if a rival firm lowers its price.
D. both face horizontal demand curves.

Solution
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Answer

D. both face horizontal demand curves. Explanation 1. Identify characteristics of a perfectly competitive market In a perfectly competitive market, firms are price takers and face horizontal demand curves. 2. Analyze the wheat farmer's market situation A wheat farmer in a perfectly competitive market also faces a horizontal demand curve because they cannot influence the market price.

Explanation

1. Identify characteristics of a perfectly competitive market<br /> In a perfectly competitive market, firms are price takers and face horizontal demand curves.<br />2. Analyze the wheat farmer's market situation<br /> A wheat farmer in a perfectly competitive market also faces a horizontal demand curve because they cannot influence the market price.
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