In a perfectly competitive market,an individual firm's demand curve is ________ at the market price.In a monopolistically competitive market,an individual firm's demand curve is ________.

Question

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In a perfectly competitive market, all firms are price takers, and therefore, the individual firm's demand curve is perfectly elastic (horizontal) at the market price.

In a monopolistically competitive market, each firm has some degree of market power due to product differentiation, and therefore, the individual firm's demand curve is negatively sloped. This is because as the firm increases its price, some consumers switch to a substitute product, reducing the demand for the firm's product.

In a Perfectly Competitive Market,an Individual Firm's Demand Curve Is