When comparing a monopoly and a firm in perfect competition, the monopoly:
A) faces a less elastic demand curve.
B) faces a more elastic demand curve.
C) could face a demand curve identical to that of a firm in perfect competition.
D) faces a perfectly elastic demand curve.

Question

Quizplus · Accepted Answer

A monopoly faces a less elastic demand curve because it is the sole provider of a good or service, giving it more pricing power compared to a firm in perfect competition, which faces a perfectly elastic demand curve due to the presence of many substitutes.

When Comparing a Monopoly and a Firm in Perfect Competition