Question

“A competitive firm faces a horizontal demand curve and monopolist faces a downward-sloping demand curve”

do you agree with this statement? explain your reasoning

Answer 1

True.

In a perfect competitive market where prices are decided neither by the buyers nor by the seller but only decided by the market forces that is demand and supply

So the change in price is constant

In this market due to constant price the demand curve becomes perfectly elastic in nature which is also called horizontal demand curve

True

If a market is Monopoly market then it is having downward sloping curve

In downward sloping demand curve, price and quantity demanded at inverse related which means if price increases in quantity demanded will decrease and vice versa

The demand curve is less elastic because in this market the consumers are not very price sensitive

The reason is that in Monopoly there is only single seller so consumers have not so many choices