For the monopolistically competitive firm,the demand curve it faces will be steeper the:
A) more easily the good can be substituted.
B) less easily the good can be substituted.
C) more complement goods are available.
D) less complement goods are available.

Question

Quizplus · Accepted Answer

Monopolistically competitive firms face relatively elastic demand because there are close substitutes available for their products. However, the demand curve will be steeper if the goods are less easily substituted. This is because consumers will have a harder time finding alternatives, making them more willing to pay higher prices for the unique characteristics of the firm's product. Therefore, choice B is the best answer. Choices A, C, and D are incorrect because they do not describe factors that affect the steepness of the demand curve faced by a monopolistically competitive firm.

For the Monopolistically Competitive Firm,the Demand Curve It Faces Will