how is the demand curve under monopolistic competition different from demand curve of a firms under perfect competition?explain with diagrams.
Dear Student
The demand curve in a monopolistic competitive market slopes downward (Fig 1). This means as price decreases, the quantity demanded for that good increases. The downward slope of the demand curve leads s to the inefficiency of the market and loss in consumer surplus.
The demand curve under perfect competition remains parallel to horizontal axis (Fig 2) . Under perfect competition the firm can sell any amount of his output without lowering the price.
Regards
The demand curve in a monopolistic competitive market slopes downward (Fig 1). This means as price decreases, the quantity demanded for that good increases. The downward slope of the demand curve leads s to the inefficiency of the market and loss in consumer surplus.
The demand curve under perfect competition remains parallel to horizontal axis (Fig 2) . Under perfect competition the firm can sell any amount of his output without lowering the price.
Regards