The larger the number of firms and the smaller the degree of product differentiation, the
A) greater the divergence between the demand and the marginal revenue curves of the monopolistically competitive firm.
B) larger will be the monopolistically competitive firm's fixed costs.
C) less elastic is the monopolistically competitive firm's demand curve.
D) more elastic is the monopolistically competitive firm's demand curve.

Question

Quizplus · Accepted Answer

With more firms and less product differentiation, consumers can easily switch to substitutes, making the demand curve more elastic.

The Larger the Number of Firms and the Smaller the Degree