Question

A purely monopolistic firm: A. has no entry barriers B. faces a downsloping demand curve C....

A purely monopolistic firm:

A. has no entry barriers

B. faces a downsloping demand curve

C. produces a product or service for which there are many close substitutes

D. earns only a normal profit in the long run

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Answer #1

A pure monopolist firm faces a downward sloping demand curve.

A monopolist firm has a market stucture which combines the Monopoly market and competitive market. The monopolist firm has an inelastic demand curve as it takes the elements of Monopoly and competitive firm.the monopolist demand curve slopes downward because it tries to increase profit by producing more number of products so that the cost of production decreases as it increases output. Therefore the marginal revenue falls for as it increases output

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