Consider the following statements when answering this question

I. When a competitive industry's supply curve is perfectly elastic, then the sole beneficiaries of a reduction in input prices are consumers.

II. Even in competitive markets firms have no incentives to control costs, as they can always on cost increases to consumers.

A) I and II are true.

B) I is true, and II is false.

C) I is false, and II is true.

D) I and II are false.

Question

Lorelei

Social Studies

10 July, 08:15

Consider the following statements when answering this question

I. When a competitive industry's supply curve is perfectly elastic, then the sole beneficiaries of a reduction in input prices are consumers.

II. Even in competitive markets firms have no incentives to control costs, as they can always on cost increases to consumers.

A) I and II are true.

B) I is true, and II is false.

C) I is false, and II is true.

D) I and II are false.

+4

Answers (1)

Know the Answer?

Yareli Walter · Answer 1

B) I is true, and II is false.

Explanation: A Competitive industry is an industry made up of firms that produce similar product or render similar services to the Consumers.

Perfectly elastic supply curve: This is a term used to describe a supply curve that changes at the slightest change in the price of goods produced and services rendered within an economy over a given period of time.