The _____ demand curve for a firm operating in a monopolistically competitive market _____ facing a perfectly competitive firm.
A)downward-sloping;is the same as the demand curve
B)downward-sloping;differs from the horizontal demand curve
C)horizontal;differs from the downward-sloping demand curve
D)horizontal;is the same as the demand curve

Question

Quizplus · Accepted Answer

In monopolistically competitive markets, the demand curve for a firm is downward-sloping, which means that as the firm increases the price, the quantity demanded will decrease. However, the demand curve for a perfectly competitive firm is horizontal, indicating that the firm has no control over the price and must accept the prevailing market price. Therefore, the demand curve for a monopolistically competitive firm differs from the horizontal demand curve for a perfectly competitive firm.

The _____ Demand Curve for a Firm Operating in a Monopolistically