Which is true of a firm faces a downward-sloping demand curve?
A)The demand for its product must be inelastic.
B)It can control both price and quantity sold.
C)It must reduce its price to sell more units.
D)It will always make a profit.

Question

Quizplus · Accepted Answer

A downward-sloping demand curve indicates that as the price decreases, the quantity demanded increases. Therefore, to sell more units, the firm must reduce its price. This does not necessarily mean that the demand for the product is inelastic or that the firm can control both price and quantity sold. Additionally, it is not guaranteed that the firm will always make a profit.

Which Is True of a Firm Faces a Downward-Sloping Demand