Question

The demand curves for perfect competition, monopoly and monopolistic competition are respectively D, E and F. Arrange the demand curves in the order of increasing steepness.

• A. D<E<F
• B. F<E<D
• C. D<F<E
• D. E<D<F

Answer 1

The correct option is C

D<F<E

For perfect competition, since the price is fixed, demand is perfectly elastic i.e. the demand curve (D) is horizontal. For monopolistic competition, the demand is elastic and the demand curve (F) is downward sloping. For monopolies, their goods have no substitutes and hence the demand is inelastic. Hence, monopolies have the steepest demand curves (E).

The increasing order of steepness is D<F<E