In an imperfectly competitive industry, the competing firms’ demand curves are independent.Question 41Select one:TrueFalse
Question
In an imperfectly competitive industry, the competing firms’ demand curves are independent.
Question 41
Select one:
- True
- False
Solution
Analysis of the Statement
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Understanding Imperfect Competition: In imperfectly competitive markets, firms possess some degree of market power, allowing them to influence prices rather than being price takers as in perfect competition.
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Demand Curves in Imperfect Competition: The statement claims that the demand curves of competing firms in this industry are independent. In an imperfectly competitive market, the actions of one firm can affect the prices and sales of others; thus, their demand curves are generally interdependent rather than independent.
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Conclusion: Since the demand curves of competing firms in such a market influence each other due to their market power, the assertion that they are independent is incorrect.
Final Answer
False
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