much revenue either. The challenge for the monopolist is to strike a profit-maximizing balance between the

price it charges and the quantity that it sells. However, why isn’t the perfectly competitive firm’s demand curve

also the market demand curve? See the following Clear It Up feature for the answer to this question.

CLEAR IT UP

What is the difference between perceived demand and market demand?
The demand curve as perceived by a perfectly competitive firm is not the overall market demand curve for that

product. However, the firm’s demand curve as perceived by a monopoly is the same as the market demand curve.

The reason for the difference is that each perfectly competitive firm perceives the demand for its products in a

market that includes many other firms. In effect, the demand curve perceived by a perfectly competitive firm is a

tiny slice of the entire market demand curve. In contrast, a monopoly perceives demand for its product in a market
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