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5 October, 21:06

If the market elasticity of demand for potatoes is - 0.3 in a perfectly competitive market, then the individual farmer's elasticity of demand A. will also be - 0.3. B. will range between - 0.3 and - 1.0. C. will be infinite. D. depends on how large a crop the farmer produces.

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  1. 5 October, 21:31
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    The correct answer is option C.

    Explanation:

    A perfectly competitive firm faces a perfectly elastic demand curve. In a perfectly competitive market, there is a large number of buyers and sellers, such that no single firm is able to affects the price or output level. The demand curve faced by a single firm is a horizontal line.

    The market demand curve, on the other hand, is downward sloping. So whatever be the market elasticity of demand, the elasticity of individual firm will be infinite.
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Home » Business » If the market elasticity of demand for potatoes is - 0.3 in a perfectly competitive market, then the individual farmer's elasticity of demand A. will also be - 0.3. B. will range between - 0.3 and - 1.0. C. will be infinite. D.
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