A firm in perfect competition faces a horizontal demand curve because it is just one small seller among many, selling an identical product—it cannot charge a single rupee more than the market price. In monopolistic competition, like my kirana, the demand curve slopes downward because my *naamta*, my credit ledger for regulars, and the specific brand of mustard oil I stock make my offerings slightly different. I see this when Mrs. Sen walks past two other shops for my particular tea, paying a little extra, proving my product is not a perfect substitute.
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