Pc Firm Graph. Note that the demand curve for the market which includes all firms is downward sloping while the demand curve for the individual firm is flat or perfectly elastic reflecting the fact that the individual takes the market price p as given the difference in the slopes of the market demand curve and the individual firm s demand curve is due to the assumption that each firm is small in size. A monopoly can increase output to q1 and benefit from lower long run average costs ac1.
The number of units sold will slightly decrease. Question 9 in a competitive market a single firm s demand curve is horizontal as shown in the graph. 1 b its demand curve becomes a horizontal line parallel to the quantity axis.
Firm wage comes from market so changes in labor demand do not raise wages.
As the competitive firm is to sell all the units at the same market price i e op or od in fig. Firm still hires the quantity where mrc mrp pm is the wage all workers are paid and qm is the number the firm hires. Assume that the firm in the graph is an unregulated monopolist. For the firm in the graph an unregulated monopolist the price elasticity of demand is unit elastic at a price and an output of.
