Other things being equal, if a once-competitive firm attains a high degree of monopoly power in its product market, then its resource demand will
A) become perfectly inelastic.
B) remain perfectly elastic.
C) become more elastic.
D) become more inelastic.

Question

Quizplus · Accepted Answer

As the firm attains a high degree of monopoly power, its market share and pricing power increase, making its demand for resources more inelastic. The firm can now pass on the cost increases to consumers with little or no impact on demand, resulting in a more inelastic resource demand.

Other Things Being Equal, If a Once-Competitive Firm Attains a High