The demand curve for a monopolist slopes downward because the market demand curve, which is downward sloping, applies to the monopolist's market activity. Demand for the monopolist's product increases as its price decreases. According to Boundless, an educational resource website, the downward sloping demand curve contributes to market inefficiency, which leads to excess production capacity and a loss of consumer surplus.Know More
As the only producer in the market, the monopolist exhibits price searching as opposed to price taking behavior. The monopolist searches the demand curve for the profit-maximizing price where the cost of producing an additional unit of output, marginal cost, is equal to the additional revenue received from selling, marginal revenue, an additional unit of product.
Because the demand curve slopes downward, marginal revenue decreases with each unit of production beyond the profit-maximizing quantity. Thus, the monopolist loses money with each additional unit produced, as marginal cost exceeds marginal revenue. This causes the restricted output and higher costs that characterize products produced by monopolists.
Because they have no competition, monopolists have no incentive to improve their products. Much of their focus is instead placed on maintaining monopolistic conditions through lobbying and other tactics that dissuade competitors from entering the market.Learn more about Economics
A change in price for a particular good is the most common factor that would not shift the demand curve for beef, explains Tutor2U. In contrast, things that do influence the demand curve for items, such as beef, include: population, change in consumers' incomes or change in tastes and preferences.Full Answer >
A shift of the demand curve to the right represents any event, excluding a change in price, that increases the quantity of a good or service demanded by buyers in the marketplace. The demand curve is an economic model of buyer behavior showing how a change in the price of a good or service results in an inverse change in the quantity of that good or service demanded by buyers in the marketplace.Full Answer >
The equation used to calculate the demand curve is Q=q1+q2...+qn or Q=f(P). Quantity demanded is represented by the variable "Q" while "q1" or "qn" correspond to an individual demand curve. The expression f(P) indicates that quantity demanded is a function of price, or "P."Full Answer >
An upward sloping demand curve indicates that demand for a good or service increases as price increases. Upward sloping demand curves are the result of conspicuous consumption and products known as “Giffen goods.”Full Answer >