For the monopolistically competitive firm,the steepness of the demand curve depends on:

Question

Quizplus · Accepted Answer

For a monopolistically competitive firm, the demand curve is relatively elastic because there are close substitutes available in the market. The availability of close substitutes determines how responsive consumers will be to changes in price. Therefore, the steepness of the demand curve depends on the availability of close substitutes. The steepness of the MC curve and the number of consumers in the market do not have a direct effect on the steepness of the demand curve for a monopolistically competitive firm.

For the Monopolistically Competitive Firm,the Steepness of the Demand Curve