Monopoly firms have: a) horizontal demand curves, so they can sell as much output as they desire at the market price

Marketing Jan 11, 2021

Monopoly firms have:

a) horizontal demand curves, so they can sell as much output as they desire at the market price.

b) downward-sloping demand curves, so they can sell as much output as they desire at the market price.

c) horizontal demand curves, so they can sell only a limited quantity of output at each price.

d) downward-sloping demand curves, so they can sell only the specific price-quantity combinations that lie on the demand curve.

Expert Solution

The answer is d).

In a monopoly, the monopolist is the sole producer in the market and thus faces the entire market demand curve. The law of demand dictates that the demand curve is downward sloping, so the monopolist faces a downward sloping market demand curve.

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