Q.Draw Demand Curve of a firm for the following :

A perfectly competitive firm faces a horizontal (perfectly elastic) demand curve, while a monopoly firm faces a downward-sloping demand curve.

The demand curve of a firm shows the price at which it can sell different quantities and is the same as its Average Revenue (AR) curve.

(a) Perfect competition:

• The firm is a price-taker; the price is fixed by the industry and the firm can sell any quantity at that price.
• So its demand curve is a horizontal straight line parallel to the X-axis (quantity axis), at the level of the ruling price.
• It is perfectly elastic, and since price stays constant, AR = MR (the two coincide along this line).
• In words, drawing: on a graph with price on the vertical (Y) axis and quantity on the horizontal (X) axis, draw a horizontal line at the given price level — that flat line is the firm's demand curve.

(b) Monopoly:

• The monopolist is the sole seller and a price-maker; to sell a larger quantity it must lower the price.
• So its demand curve slopes downward from left to right (negatively sloped).
• Here AR falls as output rises, and MR lies below AR. …