The shape of the monopolist's demand curve indicates that:
A)profit per unit increases as more units are sold.
B)demand for the good produced by a monopoly firm is elastic.
C)the firm practices price discrimination.
D)price and output are inversely related for the firm.

Question

Quizplus · Accepted Answer

The shape of the monopolist's demand curve is downward-sloping, indicating that price and output are inversely related for the firm. As the monopolist increases output, it must lower the price to entice additional buyers to purchase the product. Therefore, the demand curve for a monopoly is always downward-sloping, and the answer is D. A is incorrect because profit per unit decreases as output increases due to diminishing marginal returns. B is incorrect because the demand for a good produced by a monopoly is typically less elastic than the demand for a good produced in a perfectly competitive market. C is incorrect because price discrimination refers to the practice of charging different prices to different customers for the same product or service, and it does not affect the shape of the demand curve.

The Shape of the Monopolist's Demand Curve Indicates That