A monopolist faces a downward-sloping demand curve, whereas a perfectly competitive firm faces a horizontal demand curve.

Question

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A monopolist has market power and can set a higher price for its product, which results in a lower quantity demanded. In contrast, a perfectly competitive firm is a price taker and has to adjust its price to match the market equilibrium, resulting in a horizontal demand curve. A monopolist has the power to set a higher price due to the lack of competition, resulting in a downward-sloping demand curve. A perfectly competitive firm, on the other hand, is a price taker and faces a horizontal demand curve at the market price.

A Monopolist Faces a Downward-Sloping Demand Curve, Whereas a Perfectly