<blockquote>
<p>Maybe I'm missing something important, but if the demand curve facing a firm in a perfectly competitive market is the same as the market demand curve shouldn't both curves have the same shape?</p>
</blockquote>
<p>No, there is a difference between <strong>market</strong> demand curve, and <strong>firm</strong> specific demand curve.</p>
<p>Generally, there is no reason why market and firm demand curve should have the same shape. You can find exceptions such as monopoly where market and firm demand are same so they will have same shape. However, these are just exceptions.</p>
<blockquote>
<p>And if it is the case that the demand curve facing a firm in a perfectly competitive market is not the market demand curve, why is this so?</p>
</blockquote>
<p>The firm demand curve is not the market demand curve, and doesn’t have the same properties as overall demand curve. In case of perfect competition firm demand curve will be flat, despite overall market demand curve being downward sloping, because there is large number of firms offering the same product, and if firm deviates from the equilibrium price, it looses all customers. Hence, even when overall market demand is downward sloping, the firm specific demand will be perfectly elastic and flat.</p>

CC BY-SA 4.0
2024-07-28T10:38:09.227Z
2024-07-28T10:38:09.227Z
1muflon1
<p>I'm studying producer-theory and I'm stuck on this. Maybe I'm missing something important, but if the demand curve facing a firm in a perfectly competitive market is the same as the market demand curve shouldn't both curves have the same shape? And if it is the case that the demand curve facing a firm in a perfectly competitive market is not the market demand curve, why is this so?</p>
<p>P.S.: This is my first question on this forum so I am still getting familiar with how it works. I do not know if my question is clear enough or if it is necessary to develop more about my doubt.</p>

CC BY-SA 4.0
2024-07-28T06:51:43.310Z
I would say that it is better to say that firm in perfectly competitive markets acts as a price-taker rather than saying that it faces horizontal demand. See this answer for more clarity: https://economics.stackexchange.com/a/55622/11824
Amit
<microeconomics><producer-theory>
Why is the demand curve that a perfectly competitive firm faces horizontal while the market demand curve is negatively sloped?
Armando Gómez
# Why is the demand curve that a perfectly competitive firm faces horizontal while the market demand curve is negatively sloped?

(Asked by: username_0 on 2024-07-28)

I'm studying producer-theory and I'm stuck on this. Maybe I'm missing something important, but if the demand curve facing a firm in a perfectly competitive market is the same as the market demand curve shouldn't both curves have the same shape? And if it is the case that the demand curve facing a firm in a perfectly competitive market is not the market demand curve, why is this so?

P.S.: This is my first question on this forum so I am still getting familiar with how it works. I do not know if my question is clear enough or if it is necessary to develop more about my doubt.

**Tags:** microeconomics, producer-theory

> **Comments:**
> **username_1**: I would say that it is better to say that firm in perfectly competitive markets acts as a price-taker rather than saying that it faces horizontal demand. See this answer for more clarity: https://economics.stackexchange.com/a/55622/11824  

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## 1 answers

### Answer by username_2 on 2024-07-28. Score: 1 | Accepted answer

> Maybe I'm missing something important, but if the demand curve facing a firm in a perfectly competitive market is the same as the market demand curve shouldn't both curves have the same shape?

No, there is a difference between **market** demand curve, and **firm** specific demand curve.

Generally, there is no reason why market and firm demand curve should have the same shape. You can find exceptions such as monopoly where market and firm demand are same so they will have same shape. However, these are just exceptions.

> And if it is the case that the demand curve facing a firm in a perfectly competitive market is not the market demand curve, why is this so?

The firm demand curve is not the market demand curve, and doesn’t have the same properties as overall demand curve. In case of perfect competition firm demand curve will be flat, despite overall market demand curve being downward sloping, because there is large number of firms offering the same product, and if firm deviates from the equilibrium price, it looses all customers. Hence, even when overall market demand is downward sloping, the firm specific demand will be perfectly elastic and flat.


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