Respuesta :
The law of diminishing marginal utility is responsible for the downward slope of the demand curve in a monopoly (the marginal utility derived from successive units of a given product will decline). To sell one extra good, the seller must reduce the price of each unit of good. The demand curve is then slanted downward.
Monopolies have downward sloping market demand curves because they are the only suppliers of a specific good or service, and thus the market demand curve is the monopolist's demand curve. The shape of a firm's demand curve determines its market power.
What are the characteristics of monopolistic competition?
Monopolistic competitors do not produce at the lowest point on their ATC, whereas perfect competitors do. Although both break even in the long run, monopolistic competitors charge more and produce less than perfect competition.
How is monopolistic competition like perfect competition?
- Monopolistic competition combines characteristics of both perfect competition and monopoly market structures.
- Firms sell products that differ in quality, quantity, and other features, so firms have pricing control and pricing policies in place.
- Because there are fewer barriers to entry and exit, it is simple to enter and exit the industry.
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