The demand curve facing a firm will be more elastic,
A)the fewer the number of competing firms
B)the more differentiated the product
C)the more substitutes there are for its product
D)the greater the firm's ability to control price
E)the larger the profit the firm can make

Question

Quizplus · Accepted Answer

When there are more substitutes for a firm's product, consumers have more options to choose from, making the demand curve facing the firm more elastic. This means that even a slight increase in price could cause consumers to switch to a substitute product, leading to a significant decrease in sales for the firm. Therefore, the firm has less control over the price and must be careful not to increase it too much.

The Demand Curve Facing a Firm Will Be More Elastic