-The figure above shows Bill's Hotdogs, a monopolistically competitive firm. If other firms enter the market and have hot dogs that are very close substitutes for Bill's Hotdogs, then the demand curve for Bill's Hotdogs will _______.

Question

Quizplus · Accepted Answer

When other firms enter the market with very close substitutes, the demand for Bill's Hotdogs will decrease (shift leftward) because consumers have more options. Additionally, the demand curve will become more elastic because consumers can more easily switch to substitutes if the price of Bill's Hotdogs increases.

-The Figure Above Shows Bill's Hotdogs, a Monopolistically Competitive Firm