What does a monopolist face, compared to a monopolistic competitor?
A)A more elastic demand curve.
B)A more inelastic demand curve.
C)A more elastic demand curve at higher prices and a more inelastic demand curve at lower prices.
D)A demand curve that has a price elasticity coefficient of zero.

Question

Quizplus · Accepted Answer

A monopolist faces a more inelastic demand curve compared to a monopolistic competitor because they are the sole supplier of the product and consumers have no choice but to accept the price they set. In contrast, a monopolistic competitor faces a more elastic demand curve, as they are not the only supplier in the market and consumers have more substitutes to switch to, making it easier for them to change suppliers if the price is too high.

What Does a Monopolist Face, Compared to a Monopolistic Competitor