[Related to the Don’t Let This Happen to You on page 468]

Explain whether you agree with the following remark:

In a perfectly competitive market each f irm faces a horizontal demand curve. This means that the firm will be unable to sell its product at a price higher than the market price, because it will lose all its customers.

Then, the f irm will f ind it prof itable to lower its price, so to attract more customers and sell more, therefore increasing its profits.