A dominant firm's residual demand curve is
A) the horizontal difference between the market demand curve and the supply curve of the fringe firms.
B) the vertical difference between the market demand curve and the supply curve of the fringe firms.
C) the demand curve left for the fringe firms after the dominant firm has determined an output level.
D) None of the above.

Question

Quizplus · Accepted Answer

The residual demand curve for a dominant firm is the horizontal difference between the market demand curve and the supply curve of the fringe firms. This curve represents the market demand that remains for the dominant firm after accounting for the output supplied by the fringe firms.

A Dominant Firm's Residual Demand Curve Is