In a perfectly competitive market, the demand curve faced by each firm is:

Question

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In a perfectly competitive market, each firm faces a perfectly elastic demand curve. This means that the firm can sell as much as it wants at the prevailing market price, but any increase in the price would lead to a total loss of customers. Therefore, the firm cannot charge a price higher than the market price, and must take the prevailing price as given.

In a Perfectly Competitive Market, the Demand Curve Faced by Each