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Illustrate demand curves facing individual firms for four (4) of the market structures that we have...

Illustrate demand curves facing individual firms for four (4) of the market structures that we have studied.

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Answer #1

a) The market demand curve under perfect competition slopes downwards, while an individual firm's demand curve is a horizontal straight line parallel to the x-axis.

c) The demand curve for an oligopoly firm is kinked indicating that as the firm increases its price, the other firms will not follow and hence he will face reduced demand.

b) and d) the demand curve and the Marginal revenue curve for a monopoly and monopolistic competitve firm is downward sloping, indicating that profits can be increased by reducing prices.

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