The demand curve facing a monopolist will be more elastic
A) the greater is the number of substitute products.
B) as the consumers' need for the good increases.
C) the greater is the amount of fixed costs to cover.
D) as the number of consumers increases.

Question

Quizplus · Accepted Answer

The greater the number of substitute products available in the market, the more elastic the demand curve facing a monopolist becomes. This is because consumers have more options to choose from and can easily switch to substitutes if the monopolist increases prices. As a result, the monopolist has less power to dictate prices and must set prices closer to the competitive level to avoid losing customers to substitutes.

The Demand Curve Facing a Monopolist Will Be More Elastic