Consider the two perceived demand curves shown in the graph. A graph with price on the vertical axis and quantity on the horizontal axis.

The graph contains two line that intersect.

Line A is perfectly horizontal and line B is downward sloping.

Select the statement that best describes the market structure of each:

a. A is oligopoly, and B is monopoly.

b. Both are monopolies.

c. Both are perfect competition.

d. B is perfect competition, and A is monopoly.

e. A is perfect competition, and B is monopoly

Question

Carlos Cruz

Business

14 July, 23:35

Consider the two perceived demand curves shown in the graph. A graph with price on the vertical axis and quantity on the horizontal axis.

The graph contains two line that intersect.

Line A is perfectly horizontal and line B is downward sloping.

Select the statement that best describes the market structure of each:

a. A is oligopoly, and B is monopoly.

b. Both are monopolies.

c. Both are perfect competition.

d. B is perfect competition, and A is monopoly.

e. A is perfect competition, and B is monopoly

+5

Answers (1)

Know the Answer?

Ferguson · Answer 1

e. A is perfect competition and B is monopoly.

Explanation:

In an economy with a perfectly horizontal line which is line A that is where firms are actually price takers in a perfect competition market therefore here even if the quantity demanded in the market is a certain number the price does not change as there are many companies that are actually producing that good therefore they compete perfectly at a certain price.

The downward sloping line is where a certain firm is producing and providing a certain good to consumers alone where price of a good varies with the quantity demanded and this market is a monopolistic market.