How does the demand curve facing a monopoly firm compare with the demand curve facing a perfectly competitive firm?
What will be an ideal response?
The demand curve facing a perfectly competitive firm is perfectly elastic (horizontal). This occurs because a firm in a perfectly competitive market is a price taker with no control over price. In contrast, the demand curve facing a monopolist is the market demand curve since it is the only producer in the market. Thus, it will be downward sloping.
Economics
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