1) What is the slope of the demand curve for a monopolist? (positive, negative,
ID: 1119267 • Letter: 1
Question
1) What is the slope of the demand curve for a monopolist? (positive, negative, vertical, or horizontal) 2) What is the slope of the marginal revenue curve for a monopolist? (positive, negative, vertical, or horizontal) 3) How does a mono polist determine itmzing price an output level? 4) For a monopolist, what is the relationship between price and marginal revenue (MR) at the profit maximizing output evel? 5) For a monopolist, what is the relationship between price and marginal cost (MC) at the profit maximizing output level?Explanation / Answer
1) The slope of the demand curve of a monopoly is negative.
Explanation: A perfectly competitive firm has no market power. It is a price taker. A perfectly competitive firm loses all customers by raising the price even slightly. So, it faces a horizontal demand curve. However, A monopoly has market power, so it can increase the price without losing all customers. When a monopoly raises the price, it keeps losing some customers but not all customers. So, a monopoly faces a downward sloping market demand curve.
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