Question

There is inverse relation between price and demand for the product of a firm under:

(choose the correct alternative)

(a) Monopoly only

(b) Monopolistic competition only

(c) Both under monopoly and monopolistic competition

(d) Perfect competition only

Answer 1

The correct option is (c). More units of commodity can be sold only at a lower price is the common feature of monopoly and monopolistic competition. Accordingly, firms demand curve sloped downwards under both markets. Therefore, there is an inverse relationship between price and demand of the product.