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Discuss the nature of demand curve under: (a) Perfect competition, (b) Monopolistic competition, (c ) Monopoly,(d) Oligopoly

Answer» <html><body><p></p><a href="https://interviewquestions.tuteehub.com/tag/solution-25781" style="font-weight:bold;" target="_blank" title="Click to know more about SOLUTION">SOLUTION</a> :a) Demand curve under perfect competition: In case of perfect competition, there are very large no. of <a href="https://interviewquestions.tuteehub.com/tag/buyers-906447" style="font-weight:bold;" target="_blank" title="Click to know more about BUYERS">BUYERS</a> and sellers <a href="https://interviewquestions.tuteehub.com/tag/selling-25929" style="font-weight:bold;" target="_blank" title="Click to know more about SELLING">SELLING</a> a homogeneous product at a price fixed by the market. Therefore, each firm is a price taker and faces a perfectly elastic demand curve.b) Demand curve under monopolistic competition: Under monopolistic competition, large no. of firms selling closely related but differentiated products makes the demand curve downward sloping. It implies that a firm can sell more output only by reducing the price of its product.c) Demand curve under monopoly: A monopoly firm islike an industry as the single seller constitutes the entire market for the product, which has no close <a href="https://interviewquestions.tuteehub.com/tag/substitutes-1231649" style="font-weight:bold;" target="_blank" title="Click to know more about SUBSTITUTES">SUBSTITUTES</a>. So, a monopolist has full freedom and power to fix price for the product. However, demand of the product is not in the control of monopoly firm. In <a href="https://interviewquestions.tuteehub.com/tag/order-1138220" style="font-weight:bold;" target="_blank" title="Click to know more about ORDER">ORDER</a> to increase the output to be sold, the monopolist will have to reduce the price. Therefore, monopoly firm faces a downward sloping demandcurve.d) Demand curve under oligopoly: The demand curve for an oligopoly firm is indeterminate, i.e. it cannot be drawn accurately as exact behavior pattern of a producer cannot be ascertained with certainty.</body></html>


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