Perceived Demand for Firms in Different Competitive Settings

A perfectly competitive firm sees a flat demand curve: it can sell as much as it likes at the going price, and charging a penny more would lose every customer. A monopoly sees the market demand curve, which slopes down steeply, because a buyer who balks at its price has to do without the product altogether.

A monopolistic competitor sits between the two. Its product is different enough that raising the price does not lose every customer, but close substitutes are available, so it loses more customers than a monopoly would. The slider sets how differentiated the product is: at the low end the curve is nearly flat like a price taker's, at the high end nearly as steep as a monopoly's.