question archive Monopoly firms have: a

Monopoly firms have: a

Subject:MarketingPrice:2.88 Bought3

Monopoly firms have:

a. Downward-sloping demand curves and they can sell as much output as they desire at the market price,

b. Downward-sloping demand curves and they can sell only a limited quantity of output at each price,

c. Horizontal demand curves and they can sell as much output as they desire at the market price,

d. Horizontal demand curves and they can sell only a limited quantity of output at each price.

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  • The answer is: b. Downward-sloping demand curves and they can sell only a limited quantity of output at each price.

The monopoly has a downward-sloping demand curve and he/she maximize profits by producing at a point where the marginal revenue is equal to the marginal cost, and the price is directly above the Mr=MC on the demand curve. This enables the monopoly to restrict the volume of output while selling at high prices.