Question

Explain why individual firms in competitive markets face more elastic demand curves than the market as a whole.

Answer 1

In a competitive market there are a number of firms in the market and each firm is too small to make any impact in the market, the goods they are selling is homogeneous. when the goods are homogeneous and there are many seller selling it, it will increase the number of substitute and as the substitute of the goods increase the good becomes more elastic. but for the market the goods cannot be having more closer substitute making it less elastic in the market.