Describe the demand curve facing a monopoly and how it differs from that facing a firm in a perfectly competitive market.

The demand curve faced by a monopoly is downward sloping due to the fact that if a monopolist reduces the prices of goods and services, then demand for produced goods and services will increase. The Average Revenue curve represents the demand curve of a monopolist.

The perfectly competitive market will face the horizontal demand curve. The horizontal demand curve indicates that the demand for goods in a perfectly competitive market is perfectly elastic. In other words, a slight increase in prices will reduce the demand for a good to zero.