Which of the following is NOT a characteristic of the demand curve faced by a firm in a monopolistically competitive market?

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, the demand curve faced by a firm is downward sloping and has a negative slope. However, the firm will produce where the demand curve is relatively elastic, not inelastic. This is because producing at a point where the demand is elastic allows the firm to maximize profits by pricing their product higher than their marginal cost, while still selling a significant quantity due to the more price-sensitive nature of the demand curve.

Which of the Following Is NOT a Characteristic of the Demand