A monopoly
A) faces a perfectly elastic demand curve.
B) does not need to take account of demand because it's the only seller.
C) raises the price it can charge for its product by increasing the quantity sold.
D) raises the price it can charge for its product by decreasing the quantity sold.

Question

Quizplus · Accepted Answer

A monopoly has market power as the only seller in the market. Therefore, it can raise the price of its product by reducing the quantity sold. This is because consumers have no alternative other than buying the product from the monopoly. The demand curve for a monopoly is downward sloping, but not perfectly elastic as consumers would still buy the product at a higher price due to the lack of substitutes.

A Monopoly