viewpoint of the perfectly competitive firm, it could sell either a relatively low quantity like Ql or a relatively

high quantity like Qh at the market price P.
222 9 • Monopoly

FIGURE 9.3 The Perceived Demand Curve for a Perfect Competitor and a Monopolist (a) A perfectly competitive

firm perceives the demand curve that it faces to be flat. The flat shape means that the firm can sell either a low

quantity (Ql) or a high quantity (Qh) at exactly the same price (P). (b) A monopolist perceives the demand curve that

it faces to be the same as the market demand curve, which for most goods is downward-sloping. Thus, if the

monopolist chooses a high level of output (Qh), it can charge only a relatively low price (PI). Conversely, if the

monopolist chooses a low level of output (Ql), it can then charge a higher price (Ph). The challenge for the

monopolist is to choose the combination of price and quantity that maximizes profits.

CLEAR IT UP
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