Explain why individual firms in competitive markets face more elastic

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

What will be an ideal response?

ANSWER

In a competitive market, if an individual firm increases its price it will lose all of its customers, as consumers simply buy from another firm. However, if the price of the good increases for all firms some consumers will not continue to buy the good, but for many prices some consumers will continue to purchase the good.