Economics GK | Economics Questions and Answers for Competitive Exams

Since all firms in perfect competition sell identical products and face the same market price, the market demand curve is determined by horizontally summing the individual firm's demand curves. Therefore, the market demand curve coincides with the demand curve of a single firm in perfect competition.

In economics, the demand for inferior goods decreases as income increases or the economy improves. When this happens, consumers will be more willing to spend on more costly substitutes.

Among the given options, only the demand for electricity is elastic, whereas the demand for medicine, rice and matchbox is inelastic.

Supply curve is the curve which shows the quantity of products a seller wishes to sell at a given price level. Supply curve projects different level of goods which can be suppliied by the producers at different levels.

The cost incurred in advertising is called selling cost.

The supply of labour also depends on the proportion of working population in the total labour force. This partly depends on the minimum age at which a person can join the labour force and engage in full time employment.

There is freedom of entry and exit. Sellers have perfect knowledge about the market conditions. They are price taker. Price Elasticity of Demand of a firm is Infinite which means demand curve for Perfect competition is a Perfectly Elastic.