A firm that faces a downward-sloping demand curve:
A) is a perfectly competitive firm.
B) is a price taker.
C) has some monopoly power.
D) cannot sell more at lower prices.

Question

Quizplus · Accepted Answer

A downward-sloping demand curve indicates that as the firm lowers its price, it can sell more units. This suggests that the firm has some degree of market power and is not a perfectly competitive firm or a price taker. A firm with a perfectly elastic demand curve is a price taker, while a firm with a perfectly inelastic demand curve has complete market power and can set any price it wants.

A Firm That Faces a Downward-Sloping Demand Curve