In a market with perfectly competitive firms, the market demand curve is usually ____ and the demand curve facing each individual firm ____.

Question

Quizplus · Accepted Answer

In a perfectly competitive market, the market demand curve is downward sloping because as the price of the product decreases, the quantity demanded by consumers increases. However, each individual firm in the market is a price taker and must accept the market price for their product, so the demand curve facing each firm is horizontal (perfectly elastic) because they can sell as much as they want at that given price.

In a Market with Perfectly Competitive Firms, the Market Demand