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Compared to a Perfectly Competitive Firm, the Demand Curve Facing

Question 195

Multiple Choice
Compared to a perfectly competitive firm, the demand curve facing a monopolistically competitive firm is
A)more elastic because there are many close substitutes for the product of a monopolistically competitive firm.
B)less elastic because monopolistically competitive firms produce similar, but not identical, products.
C)just as elastic because there are many sellers in both markets.
D)more elastic because in the long run, the demand curve is tangent to the firm's average total cost curve.

Compared to a perfectly competitive firm, the demand curve facing a monopolistically competitive firm is


A) more elastic because there are many close substitutes for the product of a monopolistically competitive firm.
B) less elastic because monopolistically competitive firms produce similar, but not identical, products.
C) just as elastic because there are many sellers in both markets.
D) more elastic because in the long run, the demand curve is tangent to the firm's average total cost curve.

Correct Answer:

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