Monopolistic competitors sell products that are _____ substitutes,and as a result,each firm has a _____ demand curve.
A)imperfect;downward-sloping
B)perfect;horizontal
C)imperfect;horizontal
D)perfect;downward-sloping

Question

Quizplus · Accepted Answer

Monopolistic competitors sell products that are imperfect substitutes, meaning that they are similar but not identical to each other. As a result, each firm has a downward-sloping demand curve because as the firm raises its price, some consumers will switch to a slightly different product offered by a competitor. This elasticity of demand means that the firm cannot charge a price significantly above its competitors without losing customers.

Monopolistic Competitors Sell Products That Are _____ Substitutes,and as a Result,each