The demand curve facing a monopolistic competitor will be more elastic than the demand curve facing a monopolist because
A)there are barriers to exit for the monopolist, but not for the monopolistic competitor.
B)the monopolistic competitor attains resource-allocative efficiency, but the monopolist does not.
C)there are substitute goods for what the monopolistic competitor produces, but not for what the monopolist produces.
D)the monopolist is a price searcher, but the monopolistic competitor is not.

Question

Quizplus · Accepted Answer

The demand curve for a monopolistic competitor is more elastic because there are close substitute goods available, making consumers more responsive to price changes. In contrast, a monopolist faces no direct competition due to the absence of close substitutes for its product.

The Demand Curve Facing a Monopolistic Competitor Will Be More