The demand curve facing the pure monopolist is
The demand curve facing the pure monopolist is
- A) perfectly price elastic
- B) perfectly price inelastic
- C) negatively sloped
- D) positively slopped
Correct Answer: C) negatively sloped
Explanation
The question is asking about the demand curve that a pure monopolist faces. A pure monopolist is a single seller in the market, without any close substitutes. The demand curve shows the relationship between the price of a product and the quantity demanded of that product. The question is asking about the shape of the demand curve that the pure monopolist faces.
Option A states that the demand curve facing the pure monopolist is perfectly price elastic. This means that an increase in price will cause a decrease in quantity demanded to the point where the increase in revenue from selling at a higher price is exactly offset by the decrease in revenue from selling fewer units. This option is incorrect for a pure monopolist because a monopolist has the power to set its own price and the demand for its product is not perfectly elastic.
Option B states that the demand curve facing the pure monopolist is perfectly price inelastic. This means that the quantity demanded is not affected by changes in price. This option is incorrect because a monopolist has some power to set the price but the demand for its product is not completely insensitive to price changes.
Option C is the correct answer. It states that the demand curve facing the pure monopolist is negatively sloped. This means that as the price of the product increases, the quantity demanded decreases. A monopolist has some power to set the price, but it must balance the desire to sell more units at a lower price with the desire to sell fewer units at a higher price.
Option D states that the demand curve facing the pure monopolist is positively sloped. This means that as the price of the product increases, the quantity demanded also increases. This option is incorrect because a monopolist cannot increase the quantity demanded by raising the price.
In summary, the correct option is option C, which states that the demand curve facing the pure monopolist is negatively sloped. This means that as the price of the product increases, the quantity demanded decreases. A monopolist has some power to set the price, but it must balance the desire to sell more units at a lower price with the desire to sell fewer units at a higher price.