As competitors enter a monopolistically competitive industry, the incumbent firms demand curves shift

Question

​As competitors enter a monopolistically competitive industry, the incumbent firms demand curves shift ​

Quizplus · Accepted Answer

When new competitors enter a monopolistically competitive industry, the demand for the incumbent firms' products will decrease. This will cause a leftward shift in the demand curve because at every given price level, consumers are now willing to purchase less. Additionally, as there are now more substitutes available, the demand will become more elastic because consumers have more options to choose from. Therefore, the correct answer is C)​To the left and becomes more elastic.

​As Competitors Enter a Monopolistically Competitive Industry, the Incumbent Firms

As Competitors Enter a Monopolistically Competitive Industry, the Incumbent Firms