The demand curve faced by a purely monopolistic seller is
downward sloping, whereas that facing the purely competitive firm is perfectly inelastic.
perfectly inelastic, whereas that facing the purely competitive firm is perfectly elastic.
perfectly elastic, whereas that facing the purely competitive firm is perfectly inelastic.
downward sloping, whereas that facing the purely competitive firm is perfectly elastic.
b. The demand curve facing a
purely competitive firm is downsloping, because the purely competitive firm is faced by a normal downward-sloping industry demand curve.
pure monopolist is perfectly inelastic, because a pure monopolist may choose any desired price and quantity combination. pure monopolist is downsloping, because the firm’s supply is so small a part of the total industry supply that it cannot affect the price.
purely competitive firm is perfectly elastic, because the purely competitive firm may sell all that it wishes at the equilibrium price.
c. The pure (profit maximizing) monopolist’s demand curve is not
perfectly inelastic, because MR is negative when demand is inelastic, so MR = MC < 0.
perfectly elastic, because the firm will still have some competitors even if they are not close.
downward sloping, because MR is negative when demand is elastic, so MR = MC < 0.
perfectly inelastic, because MR < MC when demand is inelastic, so the price would be falling.