For the monopoly firm, its demand curve is
A)perfectly inelastic.
B)the market demand curve.
C)perfectly elastic.
D)necessarily unit elastic.

Question

Quizplus · Accepted Answer

The monopoly firm is the only producer in the market, so its demand curve is the same as the market demand curve. It is not perfectly inelastic, as consumers may choose to substitute to other goods if the monopoly firm raises its prices. It is not perfectly elastic, as the monopoly has some market power and can control the quantity sold by adjusting its price. It is not necessarily unit elastic, as elasticity of demand depends on the specific characteristics of the good and the availability of substitutes. Therefore, the best choice is B, the market demand curve.

For the Monopoly Firm, Its Demand Curve Is