The price elasticity of demand for a good produced by a monopolist
A) equals zero as long as the good has no close substitutes.
B) is always inelastic since the demand curve slopes down.
C) does not equal zero because there will always be some substitutes, however imperfect they may be.
D) does not equal zero because every good has at least one good substitute for it.

Question

Quizplus · Accepted Answer

Even if the good has no perfect substitute, there will always be some substitutes, however imperfect they may be, which means that the price elasticity of demand will not be equal to zero. Therefore, option A and B are both incorrect. Option D is false because there may be goods that do not have a substitute at all.

The Price Elasticity of Demand for a Good Produced by a Monopolist