In monopolistic competition, which of the following would make an individual firm's demand curve less elastic?
A) the purchase of more efficient machinery
B) an increase in the price of the firm's product
C) increased brand loyalty toward the firm's product
D) an increase in the number of rival firms

Question

Quizplus · Accepted Answer

Increased brand loyalty toward the firm's product would make consumers less sensitive to changes in price and therefore make the firm's demand curve less elastic. This would allow the firm to have greater pricing power and potentially earn higher profits. The other choices would either have no effect or make the demand curve more elastic.

In Monopolistic Competition, Which of the Following Would Make an Individual