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The graph of the demand curve for a good is perfectly horizontal. What does that say...

The graph of the demand curve for a good is perfectly horizontal. What does that say about the seller's pricing power?

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Answer #1

The seller has no pricing power and therefore he is a price taker. The seller has no control over the price.

Demand curve of the firm is perfectly horizontal in perfectly competitive market. This means the sellers fails to make any influence on the price of the commodity and therefore the sellers are price taker. This shows that the sellers has to accept the price as determined by the forces if market supply and market demand, it can sell whatever amount it wishes to sell at this price.

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