The demand curve faced by a monopolistically competitive firm is:
A) vertical.
B) horizontal.
C) highly elastic.
D) highly inelastic.

Question

Quizplus · Accepted Answer

The demand curve faced by a monopolistically competitive firm is highly elastic. This is because there are close substitutes for the product offered by the firm, and consumers are responsive to changes in price. As a result, the firm cannot raise its price without losing a significant number of customers, and it has to keep the price similar to its competitors.

The Demand Curve Faced by a Monopolistically Competitive Firm Is