A perfectly competitive firm A. has a perfectly elastic supply. B. has a perfectly inelastic demand. C. sells a product that has perfect substitutes. D. Answer A and answer B are correct. E. Answer A and answer C are correct.

Sol114:

A. has a perfectly elastic supply.

In a perfectly competitive market, a firm is a price taker and has a horizontal supply curve, which means that it can sell any quantity of the good at the market price. This implies that the supply is perfectly elastic, and a small increase in the market price will induce the firm to supply a large quantity of the good, while a small decrease in the market price will lead the firm to supply zero quantity.

Answer A is correct.