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Homework answers / question archive / Identify the correct statement from this list of statements about demand relationships
Identify the correct statement from this list of statements about demand relationships.
A) The demand curve is likely to be more inelastic if we make the time period longer between the price change and the point we measure the quantity response.
B) The demand curve for the individual firm is likely more elastic than the demand for the entire industry.
C) Firms selling "commodity"-type products (where their product is essentially identical to competitors) generally have quite steep demand curves.
D) None of the above is true.
The correct option is B) The demand curve for the individual firm is likely more elastic than the demand for the entire industry.
An individual firm in an industry faces competition from the other firms in the industry. This means that if the firm raises the price of its product, consumers will look quickly look to shift to competing products. This makes the demand elastic. The demand for the entire industry is less elastic as consumers do not have any other option even if all the firms in the industry raise their prices.
