The demand curve for a perfectly competitive firm is

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The demand curve for a perfectly competitive firm is perfectly elastic because the firm is a price-taker and the market sets the price. The firm can sell any quantity of output it wants at the prevailing market price, but it cannot influence the market price by changing its own output. Therefore, if the firm raises its price slightly, buyers will switch to other firms that sell the same product at a lower price, and the firm will lose all its sales. Conversely, if the firm lowers its price slightly, it will sell all its output at the market price, but it will not be able to capture a higher price because other firms are selling at the same price. Thus, the demand curve for a perfectly competitive firm is a horizontal line at the market price.

The Demand Curve for a Perfectly Competitive Firm Is