Monopolistically competitive firms face a perfectly elastic demand curve.

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Monopolistically competitive firms face a downward sloping demand curve, making it imperfectly elastic. This is because they are selling differentiated products that have substitutes, which gives them some ability to set prices above their marginal costs. However, since there are close substitutes, consumers can easily switch to a competitor's product if the price increases too much, limiting the firm's pricing power.

Monopolistically Competitive Firms Face a Perfectly Elastic Demand Curve