The monopolistically competitive seller's demand curve will tend to become more elastic the:
A)more significant the barriers to entering the industry
B)greater the degree of product differentiation
C)larger the number of possible substitutes
D)smaller the number of competitors
E)lower the price of the seller's product

Question

Quizplus · Accepted Answer

The greater the number of possible substitutes for a monopolistically competitive seller's product, the more elastic its demand curve will be. This is because consumers will have more options to switch to if the price of the seller's product increases. As a result, the seller will have less market power and will need to be more price-sensitive to avoid losing customers.

The Monopolistically Competitive Seller's Demand Curve Will Tend to Become