Question

explain how and why the relationship between demand curve and marginal revenue curve differs between a unregulated monopoly and a perfect competitive firm.

Answer 1

The demand curve in a perfect competition is perfectly elastic due to the many firms in the market structure. Therefore, the product priced is industry-controlled whereby every firm has to embrace the price. Conversely, a downward slope average-revenue curve is experienced in a monopolistic market. The MR and AR curves differently from each other implying that the price is large under the control of monopolistic firms in the industry.