The demand curve any monopolist uses in making output decisions is:
A) the same as the demand curve facing a perfectly competitive firm.
B) vertical, because there are no close substitutes for its product.
C) horizontal, because there are no close substitutes for its product.
D) the same as the market demand curve.
E) perfectly inelastic.

Question

Quizplus · Accepted Answer

A monopolist has market power, which means they can influence the price of their product. Therefore, the demand curve the monopolist faces is not the same as a perfectly competitive firm's demand curve, which is perfectly elastic. However, the monopolist still faces the market demand curve and must consider it when making output decisions. Therefore, the demand curve the monopolist uses in making output decisions is the same as the market demand curve.

The Demand Curve Any Monopolist Uses in Making Output Decisions