Product differentiation makes the demand for a monopolistically competitive firm's product:
A) perfectly elastic.
B) more elastic than for a monopoly.
C) more inelastic than for a monopoly.
D) perfectly inelastic.

Question

Quizplus · Accepted Answer

Product differentiation creates substitutes for a monopolistically competitive firm's product, making demand more elastic than for a monopoly. However, it is not perfectly elastic because there are still some unique aspects of the product that differentiate it from other substitutes.

Product Differentiation Makes the Demand for a Monopolistically Competitive Firm's