As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will

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When new firms enter a monopolistically competitive industry, they increase the number of products available that are close substitutes to the existing firms' products. This causes the demand curve for each existing firm to shift to the left, as some consumers switch to the new firms' products. Additionally, because there are more substitutes available, the demand for each existing firm's product becomes more elastic, as consumers have more alternatives to switch to if the price of one firm's product increases.

As New Firms Enter a Monopolistically Competitive Industry, the Demand