Final answer:
In a perfectly competitive market, firms are assumed to be price takers with identical goods and easy market entry and exit, but they do not face downward-sloping demand curves as that would imply some market power, which is not characteristic of perfect competition.
Step-by-step explanation:
In the context of perfect competition, a market scenario is assumed where many conditions are met, except for firms facing downward-sloping demand curves. By definition, perfect competition characterizes a market structure by the following features:
- A large number of firms and buyers.
- Firms produce identical goods, meaning products are perfect substitutes for one another.
- There is easy entry and exit of firms in the market, with no significant barriers to entry or exit.
- Firms are price takers rather than price makers, which means that they accept the market price determined by supply and demand and cannot influence it.
Therefore, the aspect that does not apply to perfect competition is firms facing downward-sloping demand curves, as this would imply some degree of market power or product differentiation, contradicting the notion of perfect substitutes and price-taking behavior.