Please explain the part I have highlighted ,when the market demand curve is downward sloping, how can it be perfect elastic, please explain clearly, thanks !...

The conditions confronting a typical rm are shown in the right panel in Figure 12.5. The demand curve facing this rm is a horizontal line at P* = 20. This means that it can sell as much or as little as it chooses at the market price of 20/unit. Put another way, any single rm can sell as much as it wants to without affecting the market price. If a rm charged more than 20, it would sell no output at all because buyers would switch to a competing rm that sells for 20. A rm could charge less than 20, of course, but would have no motive to do so if its objective were to maximize economic prot, since it can already sell as much as it wants to at 20. The result is that even though the market demand curve is downward sloping, the demand curve facing the individual rm is perfectly elastic. (Recall from the denition of price elasticity in ha t r 5 that a horizontal demand curve has innite price elasticity, which is what 'perfectly elastic' means.) In the right panel in Figurg 12 .5 the representative rm maximizes its prot by equating P* 20/unit to marginal cost at an ou ut level of Q1- - 30 units/wk At that output level its total revenue is 91 1,600/wk and its total costs are AT012: 0L (12/unit) (80 units/wk)= 960/wk Its economic prot 1s the difference between total revenue and total cost, 1,600/wk 960/wk = 640/wk, and is represented by the shaded