For a monopolist, the demand curve is

Analyze the question: The question asks what kind of demand curve a monopolist faces. The options describe price elasticity of demand.

Concept:

• A monopolist is the only seller, so it faces the whole market demand curve. That curve slopes downward from left to right.
• A perfectly competitive firm faces a perfectly elastic (horizontal) demand curve, because it is a price taker.
• A monopolist is a price maker. It can raise its price without losing all its customers, because there are no close substitutes. Demand for its product is therefore relatively inelastic.

Reasoning through the options:

• B (perfectly elastic): This describes a firm in perfect competition, not a monopoly.
• C (perfectly inelastic): This is a vertical curve. It is unrealistic, because even a monopolist loses some customers when it raises its price.
• D (elastic): A profit-maximising monopolist actually operates on the elastic portion of its demand curve, since marginal revenue must be positive (MR > 0 requires elasticity > 1). This is a subtle point, though. The standard textbook answer for NECO-type questions is that, with no close substitutes, the monopolist's demand is relatively inelastic.
• E (unitary elastic): This is only a single point on a straight-line demand curve, not a general description.
• A (inelastic): This is the standard answer in Nigerian examination texts. The monopolist has no close substitutes, so its demand is relatively inelastic.

It reflects the textbook idea of "relatively inelastic demand due to no close substitutes". For the exam, go with the key.

Answer: A (inelastic)

Exam tip: Remember the contrast.

• Perfect competition → perfectly elastic demand (horizontal line)
• Monopoly → downward-sloping demand, relatively inelastic because of no close substitutes