AuthorTopic: confused as hell on this eco topic!
tinnie
@2014-09-01 22:16:25
page no. 103 of the cfai module states that the demand curve in perfect competion doesnt have a slope i.e its a straight line such that a.r=m.r=p=demand curve.

page 153 of the module states that the demand curve in perfect competition is negatively sloped??!!! so what is this? can any1 explain me whats the shaope of the demand curve like?
gervais7
@2014-09-04 21:11:00
The horizontal demand curve is for the firm, the downward sloping demand curve is for that industry.

Dont try to analyze this in too much depth; essentially, to get from one to the other relies on limit arguments la calculus. Just remember: (price) inelastic demand for the firm, (price) elastic demand for the industry.
tinnie
@2014-09-13 08:38:20
wait i though about it again and shouldnt it be the other way around..downward sloping for the entire market..because for (entire consumers in the market)consumers to demand more the prices must be reduced whereas an individual firm faces horizontal demand curve i.e because of a large number of buyers and the relative small size of the firm the consumers demand all of its production at the same prize..i.e it can supply as much as it produces(because it produces a very small amount compared to total industry,it can supply all that it produces at the same prize)

CFA Discussion Topic: confused as hell on this eco topic!

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