Here's why:

• Perfectly Elastic Demand:
  • In a perfectly competitive market, individual firms are price takers. They cannot influence the market price.
  • If a firm tries to charge a price higher than the market price, it will sell nothing because buyers can easily purchase the identical product from other firms.
  • Therefore, the demand curve faced by an individual firm is a horizontal line at the market price, which represents perfectly elastic demand. This means that the firm can sell any quantity at the prevailing market price.