A Monopolistic Firm Faces a Downward-Sloping Demand Curve Because

question 33

Multiple Choice

A monopolistic firm faces a downward-sloping demand curve because

• A)there are a large number of firms in the industry,all selling the same product.
• B)the demand for its product is always inelastic.
• C)the market price is affected by the amount sold by a monopolistic firm.
• D)marginal revenue is negative throughout the feasible range of output.
• E)the monopolistic firm can exploit economies of scale.

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Definitions:

Useful Life

The estimated period over which a fixed asset is expected to be useful to the owning entity, crucial for calculating depreciation.

Machine

Equipment or devices designed to perform specific tasks, often used in manufacturing and production processes.

Internal Rate

Commonly denotes the internal rate of return (IRR), the discount rate at which the net present value (NPV) of all cash flows from a specific project is zero.

Cash Operating

The process dealing with the direct cash flows from business operations, emphasizing a company's liquidity in the short term.