The demand curve for a monopolistic competitor slopes downward because
A)demand drops to zero after a slight price increase.
B)there are close but not perfect substitutes for the product.
C)customers have no loyalty to the product.
D)the product is undifferentiated.

Question

Quizplus · Accepted Answer

The demand curve for a monopolistic competitor slopes downward because there are close but not perfect substitutes for the product. This means that if the price of the product increases slightly, consumers may switch to a similar product offered by a competitor. Therefore, a monopolistic competitor must balance the price of the product with the perceived uniqueness or differentiation of their product in order to maintain market share and maximize profits.

The Demand Curve for a Monopolistic Competitor Slopes Downward Because