The market demand curve for a perfectly competitive industry __.Multiple choice question.slopes downwardis perfectly inelasticis perfectly elasticslopes upward

Analysis of the Market Demand Curve

1. Understanding Perfect Competition

   • In a perfectly competitive market, there are many buyers and sellers, and products are homogeneous. This leads to a situation where no single buyer or seller can influence the market price.

2. Demand Curve Characteristics

   • The demand curve in such a market reflects how much of a good consumers are willing to purchase at different price levels. Typically, the demand curve for an individual firm in a perfectly competitive market is perfectly elastic at the market price because consumers can buy from many suppliers.

3. Options Analysis

   • Slopes Downward: This could be true for the market demand curve, as overall demand generally decreases with an increase in price.
   • Perfectly Inelastic: This means quantity demanded does not change with price, which is not typical in a competitive market.
   • Perfectly Elastic: This suggests consumers are willing to buy any amount at a certain price, representing an individual firm's demand curve rather than the market.
   • Slopes Upward: This is not typical for demand curves in general; they usually slope downward.

Final Answer

The correct answer is: slopes downward.

The market demand curve for a perfectly competitive industry reflects the normal behavior of demand, showing that as prices decrease, the quantity demanded increases.