A monopolistic competitor's demand curve is
A)perfectly elastic
B)less elastic than a monopolist's or oligopolist's but more elastic than a perfect competitor's
C)as elastic as an oligopolist's
D)more elastic than a monopolist's or oligopolist's but less elastic than a perfect competitor's
E)perfectly inelastic

Question

Quizplus · Accepted Answer

A monopolistic competitor's demand curve is more elastic than a monopolist's or oligopolist's but less elastic than a perfect competitor's. This is because a monopolistic competitor faces competition from similar products in the market, making consumers more willing to switch brands in response to a price change than they would be in a monopoly or oligopoly situation. However, product differentiation allows monopolistic competitors to exert some control over price and differentiate themselves from competitors, so their demand curve is not perfectly elastic like in a perfectly competitive market.

A Monopolistic Competitor's Demand Curve Is