1)Describe the demand curve facing a monopolistic competitive market and how it differs from that facing a firm in a purely competitive market.

2)Explain the difference between a monopoly and a monopolistic competitive market.

1)In the model of pure or perfect competition, there are many buyers and sellers of a product that is identical. That means the demand curve faced by a single firm in pure competition is horizontal because the market will demand as much as each of the individual sellers can produce at the given market price.

The monopolistic competitor has a chance to adjust prices somewhat over a limited range of prices because the products are slightly differentiated. Brand name products such as shampoo and toothpaste would be examples. That means the monopolistic competitors demand curve is not quite horizontal, but slightly downward sloping. Most consumers might pay a little bit more for their favorite brand, but not a lot.

2)