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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

Answer :

Answer:

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.

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