When the Number of Substitutes Increase, the Demand Curve for a Monopolist

question 181

Multiple Choice

When the number of substitutes increase, the demand curve for a monopolist will

• A) not change.
• B) become more elastic.
• C) become more inelastic.
• D) become steeper.

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Definitions:

Retained Earnings

Profits that a company keeps or retains rather than distributing to shareholders as dividends, often used for reinvestment.

Stock Split

A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the market capitalization remains the same.

Repurchase of Stock

This refers to a scenario where a company buys back its own shares from the marketplace, reducing the amount of outstanding stock.

Market Price

The ongoing rate at which an asset or service is offered for sale or buying.