Demand Curve under Monopoly

A demand curve in a monopoly illustrates the relationship between the price and the quantity demanded of a product.

The curve slopes downward, indicating that people generally want to buy less when the price increases.

The steepness of the curve reflects the degree of elasticity. When a demand curve appears to be more steep when using the same units on the X and Y axes, this implies that the demand curve is relatively more inelastic. The relatively increased steepness of the market demand curve implies that the quantity demanded by consumers is much less responsive to any given change in market price.

This happens because there's only one seller, no close substitutes, and consumers have limited choices. If the monopolist raises the price, consumers will decrease the quantity demanded.  But, due to limited options, buyers may continue purchasing only slightly lower quantities of the good, even with higher prices, contributing to the curve's steepness.

For example, De Beers Group is a major player in the diamond mining industry. If De Beers raised its prices, it would lead to a decrease in the quantity demanded. However, this decrease would be less responsive as buyers would find it challenging to switch to another supplier, making the demand curve downward-sloping and steeper.