The larger the number of firms and the less the degree of product differentiation, the greater will be the elasticity of a monopolistically competitive seller's demand curve.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, a larger number of firms and less product differentiation mean consumers have more substitutes available, making them more sensitive to price changes, hence increasing the elasticity of demand for a seller's product.

The Larger the Number of Firms and the Less the Degree