If a firm faces a downward-sloping demand curve
A)the demand for its product must be inelastic.
B)it can control both price and quantity sold.
C)it must reduce its price to sell more units.
D)it will always make a profit.

Question

Quizplus · Accepted Answer

If a firm faces a downward-sloping demand curve, it means that as the price of the product increases, the quantity demanded decreases. Therefore, to sell more units, the firm must reduce its price to increase demand. This is the only option that accurately describes the relationship between price and quantity demanded. Option A is incorrect because an inelastic demand curve would be represented by a vertical line, not a downward-sloping one. Option B is incorrect because the firm cannot control both price and quantity sold; as price decreases, quantity demanded typically increases. Option D is incorrect because profitability depends on many factors, not just the shape of the demand curve.

If a Firm Faces a Downward-Sloping Demand Curve