Suppose that the demand curve facing XYZ Co. slopes downward. This implies that the ﬁrm:
A) has very low marginal and average costs.
B) can sell all that it wants at the established market price.
C) must lower its price to sell additional units of output.
D) faces perfectly inelastic demand for its product.

Question

Quizplus · Accepted Answer

A downward-sloping demand curve implies that to sell more units, a firm must lower its price, as consumers are only willing to buy additional quantities at lower prices. This does not necessarily relate to the firm's cost structure, the ability to sell unlimited quantities at a market price, or perfectly inelastic demand.

Suppose That the Demand Curve Facing XYZ Co