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

-A perfectly competitive firm faces a downward sloping market demand curve.

Question

The figure given below shows the aggregate demand and supply curves of a perfectly competitive market.Figure 10.7
 
-A perfectly competitive firm faces a downward sloping market demand curve.

Quizplus · Accepted Answer

A perfectly competitive firm faces a horizontal or perfectly elastic market demand curve, not a downward sloping one. This is because each firm is too small to affect the market price and must take the prevailing market price as given.

The Figure Given Below Shows the Aggregate Demand and Supply