At any point where a monopolist's marginal revenue is positive, the downward-sloping straight-line demand curve is:
A) perfectly elastic, as is the perfectly competitive firm's.
B) elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic.
C) elastic but not perfectly elastic, as is the perfectly competitive firm's.
D) inelastic, while a perfectly competitive firm's demand curve is perfectly elastic.

Question

Quizplus · Accepted Answer

A monopolist's marginal revenue curve is below its demand curve and is twice as steep as its demand curve. Therefore, at any point where marginal revenue is positive, the demand curve must be elastic but not perfectly elastic, and a perfectly competitive firm's demand curve is perfectly elastic.

At Any Point Where a Monopolist's Marginal Revenue Is Positive