What shape does the demand curve facing a firm in imperfect competition typically have?

In the context of imperfect competition, the demand curve facing a firm typically takes the shape of a downward-sloping line. This reflects the reality that a firm has some degree of market power, allowing it to influence the price of its product. As the price increases, the quantity demanded by consumers generally decreases, illustrating the inverse relationship between price and quantity demanded that characterizes most demand curves.

When a firm operates in an imperfectly competitive market—such as monopolistic competition or oligopoly—it can differentiate its products or face limited competition. This differentiation enables the firm to set a higher price than it would be able to in a perfectly competitive market, where firms are price takers. Consequently, as a firm raises its prices, consumers will purchase fewer units, resulting in a downward-sloping demand curve that demonstrates this behavior.

Thus, the shape of the demand curve in imperfect competition is critical for firms as it affects their pricing strategy and overall revenue decisions. Understanding this downward-sloping demand curve is essential for analyzing how firms in such markets operate and respond to changes in price and market conditions.