The demand curve facing a firm in monopolistic competition is downward sloping, because the firm
A)sells a differentiated product.
B)is the entire industry by itself.
C)is small relative to the market.
D)b and c
E)none of the above

Question

Quizplus · Accepted Answer

The demand curve for a firm in monopolistic competition is downward sloping primarily because it sells a differentiated product, which means consumers see its product as unique in some way compared to competitors. This differentiation gives the firm some degree of market power, allowing it to set prices above marginal cost.

The Demand Curve Facing a Firm in Monopolistic Competition Is