If a monopoly or a monopolistic competitor raises their prices, the quantity demanded .

Question

If a monopoly or a monopolistic competitor raises their prices, the quantity demanded                   .

BlackTom AI · Accepted Answer

In a monopoly or monopolistic competition, the firm faces a downward-sloping demand curve. This means that if the firm raises its price, the quantity demanded by consumers generally falls, as other buyers may switch to substitutes or reduce purchases.

Option by option reasoning:

- is uncertain: This is incorrect because demand for a single firm in these market structures is not random or uncertain with a price increase; it follows the downward-sloping demand relationship, so quantity demanded tends to fall when price rises.

- will expand: This would imply that higher prices increase quantity demanded, which contradicts the fundamental law of demand for a typical downward-sloping demand curve faced by a monopolist or monopolistic competitor.

- stays the same: If price rises and the firm’s demand curve is downward sloping, quantity demanded will change; it does not remain constant. A constant quantity despite price change would imply a perfectly inelastic demand, which is not generally the case in these market structures.

- will decline: This aligns with the downward-sloping demand that a monopolist encounters. When price increases, fewer consumers are willing or able to purchase the good, leading to a reduced quantity demanded.

In summary, the correct interpretation is that a price increase by a monopoly or monopolistic competitor leads to a decline in quantity demanded, consistent with the basic demand behavior in these market structures.

If a monopoly or a monopolistic competitor raises their prices, the quantity demanded .Single choice

Similar Questions

Assuming all other factors remain the same, in a demand curve for most items, raising the price of a purchase typically results in _______.

18. The law of the demand states that there is a _______________ between the price and the quantity of the demand

Which is of the following statements is correct?

When quantity demanded decreases in response to a change in price:

经济学家将价格升高导致需求量降低的关系称为 _____________。

需求的性质表明，随着商品价格的上涨：

需求曲线向下倾斜再次说明了随着 _ 上升，_____ 下降的模式。

Economists refer to the relationship that a higher price leads to a lower quantity demanded as the _____________.

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