question archive Which of the following correctly describes how a firm's monopoly power would decrease? A
Which of the following correctly describes how a firm's monopoly power would decrease? A
Subject:EconomicsPrice:2.88 Bought3
Which of the following correctly describes how a firm's monopoly power would decrease?
A. If the market demand curve becomes more elastic, the firm's demand curve will become more elastic.
B. If other firms are reluctant to raise their price, the firm's demand will become more inelastic.
C. If the number of firms increases, the firm's demand will become more inelastic.
D. If the production process includes more fixed inputs, the firm's demand will become more elastic.
E. If the cost of production increases, the firm's demand will become more elastic.
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The correct answer is A) If the market demand curve becomes more elastic, the firm's demand curve will become more elastic.
A firm's monopoly power will decrease if the market demand curve becomes more elastic. Elastic demand means that the change in demand for goods and services will be proportionally greater than the change in prices of goods and services. Thus, if the firm's demand curve is elastic, then the consumer would reduce its spending if the prices of those goods rise.
