HELPPPPP! Economics question!?

Question

How elastic is the demand curve for a firm in a perfectly competitive market?

Answer 1

It's ♦perfectly elastic♦ - it is given by definition of perfect competition - so demand in this case is just horizontal line.

Answer 2

Note that the demand curve for the market, which includes all firms, is downward sloping, while the demand curve for the individual firm is flat or perfectly elastic, reflecting the fact that the individual takes the market price, P, as given. The difference in the slopes of the market demand curve and the individual firm's demand curve is due to the assumption that each firm is small in size. No matter how much output an individual firm provides, it will be unable to affect the market price. Note that the individual firm's equilibrium quantity of output will be completely determined by the amount of output the individual firm chooses to supply