In the theory of perfect competition, the market demand curve is __________ and the firm faces a demand curve that is __________.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the market demand curve is downward sloping, reflecting the overall market's decreasing willingness to pay as quantity increases. However, an individual firm faces a perfectly elastic demand curve at the market price, meaning it can sell any quantity at the prevailing market price but cannot influence the price itself.

In the Theory of Perfect Competition, the Market Demand Curve