A student says, "My economics professor must be confused. First he tells us that in perfect competition, the demand curve is completely flat-horizontal. But then he draws a supply and demand diagram that has a downward-sloping demand curve. What gives?" Resolve this student's problem in a single sentence.

In economics, the demand curve is a graphical representation of the relationship between the price of a good and the quantity of that good that consumers are willing and able to purchase at various prices. Typically, the demand curve slopes downward, reflecting the inverse relation between price and quantity demanded. As the price of a good decreases, consumers are usually willing to purchase more of that good, and vice versa.

Understanding the demand curve is crucial for businesses to determine the optimal price point for their products in order to maximize revenues. It's also used by policymakers to predict the impact of various policy decisions, such as taxation and subsidies, on consumer behavior.

Market demand, as opposed to individual demand, aggregates the preferences of all consumers in a particular market for a specific good or service. By adding up the quantity demanded by all individuals at each price point, we obtain the market demand curve. This curve offers a broader perspective, illustrating the total quantity of a good that consumers in the market are willing to purchase at different price levels.

The market demand is influenced by various factors including income levels, population growth, and consumer preferences. A good understanding of market demand helps firms and policymakers to forecast industry trends, plan production schedules, and ascertain potential market growth.

Perfectly elastic demand refers to a scenario where the quantity demanded can change infinitely with even a microscopic change in price. In graphical terms, this is represented by a horizontal line on the demand-supply diagram, indicating that consumers are willing to buy any amount of the product at a certain price, but none at all if the price increases even slightly.

This concept is often applied in the context of perfect competition, where many firms offer a good or service that is essentially identical, leading consumers to be highly sensitive to price changes.

A 'price taker' is a firm or individual in a market structure that does not have the ability to influence the price of the product it sells. This is a fundamental attribute in perfectly competitive markets, where the presence of numerous competitors and an undifferentiated product mean that no single firm can set prices above the market equilibrium. Instead, they must accept the going price determined by the overall supply and demand in the market. Price takers focus on quantities—deciding how much to produce and sell at the given market price.

The supply and demand diagram, also known as a price-quantity graph, is a foundational concept in economic theory depicting the balance between the quantity of a good that producers are willing to sell and the quantity consumers are willing to buy. The intersection of the demand and supply curves in this diagram indicates the market equilibrium, where the quantity supplied equals the quantity demanded, and the market 'clears'.

The simplicity of this model makes it a powerful tool for understanding and predicting how various factors, such as shifts in demand or supply due to external influences, will affect the price and quantity of goods sold in the market.