In monopolistic competition there is/are
A)many sellers who each face a downward-sloping demand curve.
B)a few sellers who each face a downward-sloping demand curve.
C)only one seller who faces a downward-sloping demand curve.
D)many sellers who each face a perfectly elastic demand curve.

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by many sellers who each have a certain degree of market power, meaning they can affect the price of their product. However, because there are many sellers, no single seller has complete control over the market. Each seller faces a downward-sloping demand curve because they must lower their price to sell more units of their product, but they cannot lower it too much or they risk losing profits. Option B is incorrect because a few sellers would indicate an oligopoly, not monopolistic competition. Option C is incorrect because if there is only one seller, it is a monopoly. Option D is incorrect because a perfectly elastic demand curve would indicate a perfectly competitive market, not monopolistic competition.

In Monopolistic Competition There Is/are