Question

From the textbook "The Agricultural Marketing System":

How do demand curves vary in the different market models? How does each affect managerial behavior and planning?

Answer 1

Ans. Demand curve is the following way in the different market Structures :

1. Perfect Competition - Firm's demand curve is perfectly elastic and is a horizontal straight line. This effects the managerial behavior and planning because the firm have no control over the price , firms earn normal profit.

2. Monopolistic Competition - Firm's demand curve is relatively more elastic and slopes downward with high elasticity. This effects the managerial behavior and planning because firm have partial control over the price , firms earn normal profit in long run.

3. Monopoly - Firm's demand curve is relatively less elastic and slopes downward with low elasticity. Monopoly firm have full control over the price and earn extra normal profits , this surely effects the managerial behavior and planning.

4. Oligopoly - Firm's demand curve cannot be specified and there is no specific relationship between price and quantity demanded. Oligopoly firm have partial control over the price and can also earn extra normal profits , this also effect the managerial behavior and planning.

Best of Luck !! !!

Thank You !!