The demand curve facing a monopolistic competitive firm will be __________ than the demand curve facing a perfectly competitive firm because the price elasticity of demand for the monopolistic competitive firm's product is __________ than that for the perfectly competitive firm.
A)steeper; higher
B)flatter; higher
C)steeper; lower
D)flatter; lower

Question

Quizplus · Accepted Answer

The demand curve facing a monopolistic competitive firm is steeper because it has some degree of market power and product differentiation, leading to a lower price elasticity of demand compared to a perfectly competitive firm, which faces a perfectly elastic demand curve.

The Demand Curve Facing a Monopolistic Competitive Firm Will Be