Question 20
Market StructuresUse the diagram (demand and marginal revenue curves). The firm portrayed is selling in
- A.a purely competitive market
- B.a market in which demand is elastic at all prices
- C.an imperfectly competitive market
- D.a market in which companies produce homogeneous commodities
Show the answer and explanation
Answer: C (an imperfectly competitive market)
Explanation
The demand curve slopes downward and MR lies below it, which happens only in imperfect competition.