The firm's demand curve in monopolistic competition slopes downward because
A) there are strong barriers to entry in the industry
B) of product differentiation among the goods firms produce
C) only few firms exist in the industry
D) the market demand curve is downward sloping
E) the market demand curve is horizontal

Question

Quizplus · Accepted Answer

Product differentiation in monopolistic competition means that each firm offers a product that is slightly different from its competitors, allowing it to have some control over its pricing. This leads to a downward-sloping demand curve for each firm's product, as they can attract customers by varying price, quality, or other product attributes.

The Firm's Demand Curve in Monopolistic Competition Slopes Downward Because