The demand curve faced by the monopolist
A) has a constant price elasticity.
B) is the industry demand curve.
C) is identical to the firm's MR curve.
D) is identical to the firm's TR curve.

Question

Quizplus · Accepted Answer

The demand curve faced by the monopolist is the industry demand curve because the monopolist is the sole producer in the market and faces the entire demand for the product. The demand curve is downward sloping, but its elasticity changes at different points along the curve. The monopolist's marginal revenue (MR) curve, on the other hand, is below the demand curve and has twice the slope. The total revenue (TR) curve is a linear upward sloping curve since the price and quantity sold move in the same direction. Thus, the demand curve faced by the monopolist is not identical to the MR or TR curves.

The Demand Curve Faced by the Monopolist