Question

The monopoly demand curve is _____________, while the perfectly competitive firm’s demand curve is _______________. This is because a monopoly is the only producer in an industry, so the monopoly firm’s _______ curve is the same as the market demand curve, while the perfectly competitive firm produces in a market with ________ competitors.

Answer 1

Downward sloping; horizontal line; demand; large number of competitors

Step-by-step explanation:

A monopoly is a market structure where there is only a single firm in the market. This firm is a price maker. It can charge whatever price it wants, but the consumers will demand more at a lower price.

That is why the demand curve of a monopoly is downward sloping and the same as the market demand curve.

A perfectly competitive market refers to the market structure where there is a large number of buyers and sellers. These firms are price takers. They face a horizontal line demand curve. This is because of a large number of competitors producing homogenous products. So if a firm raises its prices the consumers will move to the firm at a lower price.

The market demand curve though is downward sloping.