Which of the Following Statements Is TRUE About the Relationship

question 365

Multiple Choice

Which of the following statements is TRUE about the relationship between a firm's demand curve under perfect competition and monopoly?

• A) Under perfect competition, the demand curve is perfectly elastic; under monopoly, the demand curve has elastic, unit-elastic and inelastic portions.
• B) Under monopoly, the demand curve is perfectly elastic; under perfect competition, the demand curve has elastic, unit-elastic and inelastic portions.
• C) The demand curves for a monopoly and perfect competition are always inelastic.
• D) We can define a demand curve under perfect competition but not under monopoly.

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Definitions:

Effect on Profit

The impact that specific actions or events have on the net income of a company.

Trade Receivables

Amounts owed to a business by its customers following the sale of goods or services on credit.

Discounted Values

Discounted values are the present values of future cash flows, calculated using a discount rate to account for the time value of money.