The demand curve as seen by a single firm within a perfectly competitive industry.    To the right is the graph of the demand curve as seen by a single firm within a perfectly competitive industry. Total industry demand is downward sloping, as always. Many small firms in conjunction with identical products mean that this is the way demand appears to the firm.

   As long as the firm sells at P*, the market price, it can sell all it wants (because it is so small). If it tries to raise its price, it will sell nothing. This is because the output of the other firms is identical and therefore, people will buy from firms with the lower price, the market price.

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