The demand curve a monopolist faces
A)is more elastic than a perfectly competitive firm's demand curve
B)is the market demand curve
C)is as elastic as a perfectly competitive firm's demand curve
D)is not affected by the prices of complements
E)will not shift in response to a change in consumer tastes

Question

Quizplus · Accepted Answer

The demand curve a monopolist faces is the market demand curve because the monopolist is the only producer in the market. Therefore, the monopolist can control the price by adjusting its output level. However, the demand curve is not as elastic as a perfectly competitive firm's demand curve because the monopolist has market power to set a higher price. The demand curve can shift in response to a change in consumer tastes, which may result in a change in the quantity demanded at a given price level. The prices of complements can also affect the demand curve.

The Demand Curve a Monopolist Faces