Giving reasons, distingiush between the behaviour of demand curves under perfect competition and monopolistic competition.

Giving reasons, distingiush between the behaviour of demand curves und

1.	Giving reasons, distingiush between the behaviour of demand curves under perfect competition and monopolistic competition.
Answer» SOLUTION : Demand curve under perfect competition: In case of perfect competition, there are very large no. of BUYERS and SELLERS selling a HOMOGENEOUS product at a price fixed by the market. Therefore, each firm is a price taker and faces a perfectly elastic demand curve.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.