wiz-icon
MyQuestionIcon
MyQuestionIcon
1
You visited us 1 times! Enjoying our articles? Unlock Full Access!
Question

Why is the demand curve of a firm under perfect competition parallel to X-axis and negatively sloped under monopoly?

Open in App
Solution

a) It is a horizontal straight line under perfect competition. It indicates that elasticity of demand is infinite.
b) It slopes downward under monopoly. More can be sold only at a lower price. But it is not very elastic. This is because there are no close substitutes of a product in the market.

flag
Suggest Corrections
thumbs-up
0
Join BYJU'S Learning Program
similar_icon
Related Videos
thumbnail
lock
Monopolistic Competition
ECONOMICS
Watch in App
Join BYJU'S Learning Program
CrossIcon