Demand curves in monopolistic competition are not perfectly elastic: due to the market power that firms have, they are able to raise prices without losing all of their customers. Demand curve in a perfectly competitive market: This is the demand curve in a perfectly competitive market.
Is the demand curve for a monopoly elastic?
MONOPOLY, MARGINAL REVENUE AND DEMAND ELASTICITY: The price elasticity of the demand curve facing a monopoly firm determines if the marginal revenue received by the monopoly is positive (elastic demand) or negative (inelastic demand). If the demand is inelastic, then marginal revenue is negative.
Why do monopolists produce where demand is elastic?
Get the answer of: Why does the Monopolist Operate on the Elastic Part of the Demand Curve? A monopolist wishing to maximise profit produces the output up to that amount at which MC = MR. Since marginal costs are always positive, a reduction in output will reduce total cost.
Why is the MR curve below the demand curve?
a. Because the monopolist must lower the price on all units in order to sell additional units, marginal revenue is less than price. Because marginal revenue is less than price, the marginal revenue curve will lie below the demand curve.
What is the demand curve for perfect competition?
A perfectly competitive firm’s demand curve is a horizontal line at the market price. This result means that the price it receives is the same for every unit sold. The marginal revenue received by the firm is the change in total revenue from selling one more unit, which is the constant market price.
Are supermarkets oligopoly?
Increasing concentration The supermarket sector is oligopolistic and the pricing strategy of supermarkets can be understood using game theory approach. It is also accepted that many farmers and growers are suffering as a result of the increasing monopsony power of the major supermarkets.
Is Tesco an oligopoly?
One of the best examples of an oligopolistic market in the UK is the supermarket sector where the main firms competing for the market are Tesco, Sainburys, Asda and Morrisons.