The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7

-If a firm is a price taker, then the demand curve faced by the firm is perfectly elastic.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-If a firm is a price taker, then the demand curve faced by the firm is perfectly elastic.

Quizplus · Accepted Answer

In a perfectly competitive market, each firm is a price taker and cannot influence the market price. Therefore, the demand curve faced by the firm is perfectly elastic, meaning that the firm can sell any quantity at the market price, but cannot sell any quantity above the market price.

The Figure Given Below Shows the Aggregate Demand and Supply