What does a perfectly elastic demand curve of a firm reflects under pe

SOLUTION

Under perfect competition, a perfectly elastic demand curve of a firm reflects Zero price control.

• Perfect competition- It is a theoretical market structure where markets have no influence on prices, all firms are price takers, the product is Identical & buyers and sellers have perfect information, firms can freely enter or exit the market, resources for labours are mobile etc.

• Perfectly elastic demand curve- It is a demand curve which shows that the market demand for a product is directly tied to the price. It is represented by a straight horizontal line. Here a change in price would eliminate all demand for the product.