Asked by arjun chapagain on Sep 24, 2024
Verified
A monopoly has
A) A perfectly elastic demand curve
B) A perfectly elastic supply curve
C) An inelastic demand curve
D) A more elastic demand curve than a competitive firm
Perfectly Elastic Demand
A market situation where demand for a product can drastically change to infinity with the slightest change in its price.
Inelastic Demand
A situation where the demand for a product does not change significantly with a change in price.
More Elastic Demand
A situation where the demand for a product is more sensitive to changes in price, meaning quantities demanded change significantly even with small price fluctuations.
- Comprehend the connection between the configuration of the market and the responsiveness of the demand and supply curves.
Verified Answer
LB
Latosha Burley5 days ago
Final Answer :
C
Explanation :
A monopoly has an inelastic demand curve because there are no close substitutes for the product, and therefore consumers have no choice but to pay the monopoly's price to obtain the product. In contrast, a competitive firm faces a more elastic demand curve, as consumers have many close substitutes to choose from, making it easier for them to switch to a substitute product if the price of the original product becomes too high.
Learning Objectives
- Comprehend the connection between the configuration of the market and the responsiveness of the demand and supply curves.