A fundamental feature of a monopolistic market is that the firm ________.
A) can sell any quantity it desires at the current market price
B) can obtain any price for any quantity of output
C) faces a perfectly inelastic demand curve
D) faces the price and quantity trade-off dictated by market demand

Question

Quizplus · Accepted Answer

In a monopolistic market, the firm faces a downward sloping demand curve, which means it has to trade-off between the price and quantity of goods produced to maximize profits. The firm cannot sell any quantity it desires at the current market price or obtain any price for any quantity of output, as it still faces market competition from close substitutes. The demand curve is also not perfectly inelastic, as in that case, any increase in price would not result in any decrease in quantity demanded.

A Fundamental Feature of a Monopolistic Market Is That the Firm