Why the firm supply curve is horizontal?

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1162652

2026-03-25 02:55

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The firm supply curve is horizontal in a perfectly competitive market because individual firms are price takers; they sell their products at the market price set by overall supply and demand. At this price, firms can sell any quantity they choose without affecting the market price. Therefore, they will supply as much as they can produce at that price, leading to a horizontal supply curve. If the price falls below this level, firms would not cover their costs and would reduce output to zero.

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