Question

The quantity demanded of an item will decline if

1) an oligarchic competitor decreases its prices.
2) a firm in perfect competition raises their prices.
3) an oligarchic competitor raises its prices.
2
4) a monopoly or a monopolistic competitor raises their prices.

Answer 1

The quantity demanded of an item will decline if a firm in perfect competition raises their prices and if a monopoly or a monopolistic competitor raises their prices. The correct options are 2 and 4.

Step-by-step explanation:

The quantity demanded of an item will decline if a firm in perfect competition raises their prices and if a monopoly or a monopolistic competitor raises their prices.

In perfect competition, there are many firms selling similar products. If one firm raises its prices, consumers have the option to switch to a different firm selling the same product at a lower price. This decrease in demand for the firm that raised its prices results in a decline in the quantity demanded of the item.

Similarly, in a monopoly or a monopolistic competition, where there are limited substitutes for the product, consumers have less choice. If the monopoly or monopolistic competitor raises its prices, some consumers may choose not to purchase the item at all, resulting in a decline in the quantity demanded.