The market demand for the product of a monopolistic competitor will likely be

Question

Quizplus · Accepted Answer

The market demand for the product of a monopolistic competitor is likely to be relatively elastic because there are close substitutes available in the market. This means that if the firm tries to raise the price of its product, consumers will switch to the substitute products, which puts a downward pressure on the demand of the firm's product. On the other hand, if the firm lowers its price, it can attract more customers away from its competitors. This flexibility in consumer choices makes the demand relatively elastic for the monopolistic competitor.

The Market Demand for the Product of a Monopolistic Competitor