Question options
A) downward sloping; downward sloping B) downward sloping; horizontal C) horizontal; downward sloping D) horizontal; horizontal E) downward sloping; upward sloping
Answer
B) downward sloping; horizontal
Explanation:
The demand curve in a perfectly competitive firm is downward sloping because it is perfectly elastic since each price change results in a corresponding change in the demand quantity.
The demand curve of a monopolist is horizontal since it is perfectly inelastic meaning a price change such as an increase or decrease in price will not cause a change in quantity demanded.
