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Perfectly Elastic Demand Curve

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Explain why the demand curve facing a perfectly competitive firm is assumed to be perfectly elastic? (i.e. horizontal at the going market price). Just 1 or 2 sentences needed.

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Solution explains why the demand curve faced by a perfectly competitive firm is perfectly elastic.

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In a perfectly competitive environment, size of every firm is very small as compared to market size meaning thereby that every firm is a price ...

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  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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