Which of the following correctly describes how a firm's monopoly power would decrease? A. If the production process includes m
ore fixed inputs, the firm's demand will become more elastic. B. If the market demand curve becomes more elastic, the firm's demand curve will become more elastic. C. If the cost of production increases, the firm's demand will become more elastic. D. If the number of firms increases, the firm's demand will become more inelastic. E. If other firms are reluctant to raise their price, the firm's demand will become more inelastic.
Answer: B. If the market demand curve becomes more elastic, the firm's demand curve will become more elastic
Explanation:
Monopoly is a market structure whereby there is just one single supplier for a particular good or service. The monopolist controls the price.
We should note that the monopolist enjoys market power due to theofact that its product has an inelastic demand that is, a price change will have a minimal impact on the demand.
But the monopoly power will reduce in a case whereby the market demand curve becomes more elastic, then the firm's demand curve will become more elastic as well.
Interest rates, inflation, unemployment, economic growth, and other factors that affect the general health and well-being of a nation or the regional economy of an organization.
