Graphically we can illustrate a firm with price setting ability by drawing their demand curve ________.

Question

Quizplus · Accepted Answer

A downward sloping demand curve illustrates that as the price of the good or service increases, the quantity demanded by consumers decreases. This means that the firm has some control over the price they charge and can adjust it to a certain extent without losing all of their customers. In contrast, a horizontal demand curve would indicate that the firm has no control over the price and must sell at the market price, while an upward sloping or vertical demand curve would be unlikely and not consistent with typical market behavior.

Graphically We Can Illustrate a Firm with Price Setting Ability