The demand curve for the output of a perfectly competitive firm is

Name: The demand curve for the output of a perfectly competitive firm is
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Question

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The demand curve for the output of a perfectly competitive firm is perfectly elastic because the firm has no market power and must accept the market price for its product. If the firm attempted to raise the price, buyers would simply purchase from other firms in the market. Therefore, the demand curve is a horizontal line at the prevailing market price.

The Demand Curve for the Output of a Perfectly Competitive