The Perceived Demand Curve for a Perfect Competitor and a Monopolist

In (a) the perfectly competitive firm sees a flat demand curve. It is so small a part of its market that it can sell a low quantity Ql or a high quantity Qh at exactly the same market price P. Its own choice of output does not move the price.

In (b) the monopolist is the whole market, so the demand curve it perceives is the market demand curve, which slopes down. Choosing the low quantity Ql puts it at S, where it can charge the high price Ph; choosing the high quantity Qh puts it at R, where it can charge only the low price Pl. Its problem is to pick the pair of price and quantity that earns the most profit. The sliders move Ql and Qh in both panels at once.