Giving reason distinguish between the behaviour of demand curves of firms under monopoly, monopolistic and perfect competition - Economics - Market Equilibrium

Question

Giving reason distinguish between the behaviour of demand curves
of firms under monopoly, monopolistic and perfect competition?

Vanita Rana · Accepted Answer

Basis
Perfect
Competition

Monopoly

Monopolistic

Demand curve
Due to large number of buyers and sellers in a perfectly
competitive market, the firm acts as a price taker, while the price
is determined by the demand for and supply of the commodities Thus,
firms have no role to play other than supplying the required output
at the existing market price and therefore, a perfectly competitive
firm faces infinitely elastic demand
curve
A monopolist firm is a price-maker It fixes the price of its
commodity in such a way that it maximises its profits If the
monopolist fixes a higher price, then lesser quantity of the output
will be demanded and lesser quantity will be sold in the market and
vice a versa This implies the negative relationship between the
monopolist's price and the quantity demand by the buyers Therefore,
a monopolist firm faces a downward sloping demand
curve
As a monopolistic firm is a price maker, so it can design its
own price policies The firms are distinguished on the basis of
their brand names, therefore each monopolistic firm enjoys a
monopolist (or monopoly) position Due to this, the demand curve
faced by a monopolistic firm are downward
sloping

Basis	*Perfect Competition*	*Monopoly*	*Monopolistic*
Demand curve	Due to large number of buyers and sellers in a perfectly competitive market, the firm acts as a price taker, while the price is determined by the demand for and supply of the commodities.Thus, firms have no role to play other than supplying the required output at the existing market price and therefore, a perfectly competitive firm faces infinitely elastic demand curve.	A monopolist firm is a price-maker. It fixes the price of its commodity in such a way that it maximises its profits. If the monopolist fixes a higher price, then lesser quantity of the output will be demanded and lesser quantity will be sold in the market and vice a versa. This implies the negative relationship between the monopolist's price and the quantity demand by the buyers. Therefore, a monopolist firm faces a *downward sloping demand curve*.	As a monopolistic firm is a price maker, so it can design its own price policies. The firms are distinguished on the basis of their brand names, therefore each monopolistic firm enjoys a monopolist (or monopoly) position. Due to this, the demand curve faced by a monopolistic firm are *downward sloping*.

Giving reason distinguish between the behaviour of demand curves of firms under monopoly, monopolistic and perfect competition?