Demand curve facing a monopoly firm is a constraint for the monop… - Vidyadip

Question

Demand curve facing a monopoly firm is a constraint for the monopolist." Comment.

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Answer

A monopoly firm has market power and is itself a price-maker. It can choose any price, it likes.
Unlike perfect competition where as output increases, price remains unchanged.
In monopoly as output increases or decreases, price changes according to what consumers are willing to pay along the demand curve. It produces and supplies a product to satisfy the entire market.
It is because a monopoly firm faces the entire demand of the market, that market demand curve is said to be a constraint facing a monopoly firm.

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