Compare demand curves facing a seller under conditions of perfect competition, monopolistic competition and monopoly, clearly reflecting the difference in their elasticities. Draw 3 curves in a single diagram.
Compare demand curves facing a seller under conditions of perfect competition, monopolistic competition and monopoly, clearly reflecting the difference in their elasticities. Draw 3 curves in a single diagram.
Under perfect competition, a firm can sell whole of its output at the same price. Therefore, the demand curve will be a straight line parallel to the x-axis [see Fig. (i)].
Under monoply, a firm can sell more of its product only at a lower price. Therefore, the demand curve of a monopolist, is negatively sloped [see Fig.(ii)]. Here, demand curve is less elastic.
Under monopolistic competition, a firm can sell more of its product only at a lower price. Therefore, the demand curve of a firm under monopolistic competition is also negatively slpoed [see Fig. (iii)]. Here, demand curve is more elastic.
Under perfect competition, a firm can sell whole of its output at the same price. Therefore, the demand curve will be a straight line parallel to the x-axis [see Fig. (i)].
Under monoply, a firm can sell more of its product only at a lower price. Therefore, the demand curve of a monopolist, is negatively sloped [see Fig.(ii)]. Here, demand curve is less elastic.
Under monopolistic competition, a firm can sell more of its product only at a lower price. Therefore, the demand curve of a firm under monopolistic competition is also negatively slpoed [see Fig. (iii)]. Here, demand curve is more elastic.
