As other firms enter a monopoly's market, the demand curve a monopoly faces
A)is unaffected.
B)becomes more inelastic.
C)becomes more elastic.
D)may become more or less elastic, depending on its Lerner Index.

Question

Quizplus · Accepted Answer

When other firms enter a monopoly's market, the demand curve for the monopoly becomes more elastic. This is because consumers now have more options and can easily switch to buying from other firms. As a result, the monopoly loses some of its market power and must lower its price and quantity to retain customers.

As Other Firms Enter a Monopoly's Market, the Demand Curve