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AP® Microeconomics

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Monopolists' Better Barriers Benefit

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The relative elasticity of the slope of the monopolist’s demand curve is impacted significantly by the level of barriers to entry by rival firms.

Which of the following statements reflects an accurate relationship between barriers to entry and the price elasticity of demand for the monopolists’ product?

A

The stronger the barriers to entry, the more elastic is the monopolist's demand curve.

B

The stronger the barriers to entry, the more inelastic is the monopolist’s demand curve.

C

Regardless of the strength of barriers to entry, demand is perfectly inelastic.

D

Regardless of the strength of barriers to entry, marginal revenue equals price at all outputs.

E

Regardless of the strength of barriers to entry, price is unit elastic at all levels of output.