Assertion (A): A firm under perfect competition faces a perfectly elastic demand curve.
Reason (R): The firm is too small to affect the market price.

Both A and R are true, and R is the correct explanation of A.Correct answerYour answerBoth A and R are true, but R is not the correct explanation of A.Correct answerYour answerA is true, but R is false.Correct answerYour answerA is false, but R is true.Correct answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer A

Correct answer: A

Both are true.
Because it cannot move the price (R), it can sell all it wants at that price and nothing above it: a horizontal demand (AR) curve (A).

Concept: Why a price taker's demand is horizontal
Typical timeTypical: 70 s
Your timeYours: —

The rule this testsRevenue at a price set by the market

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Ten questions from Revenue & Producer's Equilibrium, at your own pace.

Assertion (A): A firm under perfect competition faces a perfectly elastic demand curve.Reason (R): The firm is too small to affect the market price.

Explanation

Assertion (A): A firm under perfect competition faces a perfectly elastic demand curve.
Reason (R): The firm is too small to affect the market price.