Which of the following best describes the demand curve faced by a nondiscriminating monopolist?

• A. It is upward sloping due to increasing returns to scale.
• B. It is the same as the market demand curve and slopes downward.
• C. It is perfectly elastic at the market price.
• D. It is perfectly inelastic at the profit-maximizing quantity.

Answer: (B)

Verified step by step guidance

1. Understand that a nondiscriminating monopolist is a single seller who charges the same price to all consumers and cannot price discriminate.
2. Recall that the monopolist faces the entire market demand curve because it is the sole supplier of the good or service in the market.
3. Recognize that the market demand curve typically slopes downward, meaning that as price decreases, quantity demanded increases.
4. Note that unlike a perfectly competitive firm, which faces a perfectly elastic (horizontal) demand curve at the market price, a monopolist's demand curve is not perfectly elastic because it can influence the price by changing the quantity supplied.
5. Conclude that the demand curve faced by a nondiscriminating monopolist is the same as the market demand curve and slopes downward, reflecting the inverse relationship between price and quantity demanded.