Demand in a Monopolistic Market Because the monopolist is the market's only supplier, the demand curve the monopolist faces is the market demand curve. You will recall that the market demand curve is downward sloping , reflecting the law of demand. The fact that the monopolist faces a downward-sloping demand curve implies that the price a monopolist can expect to receive for its output will not remain constant as the monopolist increases its output. Price-searching behavior. Unlike a perfectly competitive firm, the monopolist does not have to simply take the market price as given. Instead, the monopolist is a price searcher ; it searches the market demand curve for the profit maximizing price. The monopolist's search for the profit maximizing price involves comparing the marginal revenue and marginal cost associated with each possible price-output combination on the market demand curve.
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This note was uploaded on 11/19/2011 for the course ECO 1310 taught by Professor Staff during the Fall '10 term at Texas State.