Final answer:
The demand curve faced by a perfectly competitive firm is perfectly horizontal, signifying that the firm can sell any quantity at the market price due to its perfect elasticity. However, the industry demand curve, which is the aggregate demand for all firms, is typically downward sloping and not perfectly horizontal.
Step-by-step explanation:
The statement that the industry demand curve in a perfectly competitive market is perfectly horizontal is false. In a perfectly competitive market, it is not the industry demand curve, but the demand curve faced by a perfectly competitive firm that is perfectly horizontal, indicating perfect elasticity. This means that the firm can sell all the output it wishes at the prevailing market price, and its demand curve is infinitely elastic. On the other hand, the industry demand curve is typically downward sloping, reflecting the fact that more goods will be demanded at lower prices industry-wide.
Each perfectly competitive firm faces a perfectly elastic demand curve due to the presence of many competitors, which implies that the firm's product is a perfect substitute for those offered by other firms.