Infinitely Elastic Demand Curve - Perfectly Competitive Firm    We depict the demand curve from the perspective of the individual firm within a perfectly competitive industry as horizontal. This is because it cannot raise price and never needs to lower price to sell its entire output.

   We learned in the section on elasticity that a horizontal demand curve is infinitely elastic. The slightest change in price is met with an essentially infinite change in quantity. If the firm raises price at all above P* it sells nothing because all the other firms are selling the identical product at price P*.

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