The following figure shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist.
Figure 11-1
-Refer to Figure 11-1.If the government wishes to regulate the monopoly firm by restricting the price at OC in the market,the demand curve will be equal to _____.
A)VD
B)CIJ
C)CFD
D)FD

Question

The following figure shows the downward-sloping demand curve [D] and marginal revenue [MR] curve and the upward-sloping marginal cost [MC] curve for a monopolist.
Figure 11-1 
-Refer to Figure 11-1.If the government wishes to regulate the monopoly firm by restricting the price at OC in the market,the demand curve will be equal to _____.
A)VD 
B)CIJ 
C)CFD 
D)FD

Quizplus · Accepted Answer

If the government wants to regulate the monopoly firm by restricting the price at OC, this means that the monopoly will have to operate at that price point. Therefore, the demand curve at price OC will be equal to CFD. This is because at price OC, the quantity demanded will be equal to point F on the demand curve, and this will be the same on the demand curve for any given price along the line OC. Therefore, the demand curve will be CFD.

The Following Figure Shows the Downward-Sloping Demand Curve [D] and Marginal