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What does a perfectly elastic demand curve mean?

Perfect elastic demand means that quantity demanded will increase to infinity when the price decreases, and quantity demanded will decrease to zero when price increases.

Which demand curve is perfectly elastic quizlet?

when demand is perfectly elastic, the demand curve is a horizontal line. the total value of sales of a good or service. it is equal to the price multiplied by the quantity sold.

What does a perfectly elastic demand curve look like?

Perfectly elastic demand is represented graphically as a horizontal line. In this case, any increase in price will lead to zero units demanded. Perfectly Elastic Demand: Perfectly elastic demand is represented graphically by a horizontal line. In this case the PED value is the same at every point of the demand curve.

What is the demand curve facing the firm?

The demand curve facing a firm tells us the price that a firm can expect to receive for any given amount of output that it brings to market or the amount it can expect to sell for any price that it chooses to set. It represents the market opportunities of the firm. quantity demanded 5 = 20 − price .

What are the assumptions of perfect competition?

A perfectly competitive market has following assumptions:

  • Large Number of Buyers and Sellers: ADVERTISEMENTS:
  • Homogeneous Products:
  • No Discrimination:
  • Perfect Knowledge:
  • Free Entry or Exit of Firms:
  • Perfect Mobility:
  • Profit Maximization:
  • No Selling Cost:

Why perfect competition is efficient?

Productive efficiency means producing without waste, so that the choice is on the production possibility frontier. In the long run in a perfectly competitive market, because of the process of entry and exit, the price in the market is equal to the minimum of the long-run average cost curve.

Is perfect competition productively efficient?

Perfect competition is considered to be “perfect” because both allocative and productive efficiency are met at the same time in a long-run equilibrium. Only if P = MC, the rule applied by a profit-maximizing perfectly competitive firm, will society’s costs and benefits be in balance.