11.2 Monopoly Demand Curve (A) Downward Sloping Curve D: In case of a competitive firm, price is given and fixed. Demand or Average Revenue curve is perfectly flexible and is a horizontal straight line. A monopolist has the freedom to charge a higher or lower price. With a change in the price, the quantity demanded also alters. Consider Figure 2. Where DD 1 is the demand curve faced by the monopolist. Each buyer is assumed as a price-taker. Suppose the discriminating monopolist sells four units of his product at four different prices: OQ 1 unit at OP 1 price, Q 1 Q 2 unit at OP 2 price, Q 2 Q 3 unit at OP 3 price and Q 3 Q 4 unit at OP 4 price.
Jan 05, 2013 · MonopolyTR is the same for the monopolist, however, since the firm is the only supplier in the market thedemand curve facing the monopolist is also the market demand curve. Therefore, unlike for theperfectly competitive firm, the demand curve facing the monopolist is downward sloping.
is impossible to separate from the demand curve it faces. The shape of the demand curve determines the shape of the marginal-revenue curve, which in turn determines the monopolist’s profit-maximizing quantity. In a competitive market, supply decisions can be analyzed without knowing the demand curve, but that is not true in a monopoly market.