The demand curve for a perfectly competitive firm is _____ while the demand curve for a monopolist is _____.

A. perfectly elastic; downward-sloping

B. vertical; downward-sloping

C. perfectly elastic; perfectly inelastic

D. perfectly inelastic; perfectly elastic

The correct option is A. perfectly elastic; downward-sloping.

In perfect competition, the demand curve is horizontal or perfectly elastic. Put it differently, demand is very responsive to price variations. This is because the products/services sold by a perfectly competitive firm have other perfect substitutes supplied by many firms.

In a monopoly, the demand is inelastic and downward sloping. The demand is not very responsive to price changes because there are no close substitutes. So as a consequence of a price increase, some consumers will stop buying the good/service; however, many of them will continue purchasing them.

Options B. and D. are incorrect because in perfect competition the demand is perfectly elastic, therefore, it is not vertical (perfectly inelastic). Option C. is incorrect because the demand in a monopoly is inelastic and not perfectly inelastic.