Because the products of firms in a monopolistically competitive market are NOT homogeneous, the

Question

Quizplus · Accepted Answer

In monopolistically competitive markets, products are differentiated, and therefore, the demand curve for a firm's product is downward sloping. This is because consumers perceive the products of different firms as imperfect substitutes, and therefore, a change in the price of a particular firm's product will affect the quantity demanded of that product. However, since the products are not identical, the demand curve for the industry is not the same as that for the firm. Additionally, the fact that products are not homogeneous also means that the demand curve for the firm's product is not perfectly elastic (horizontal), as it would be in a perfectly competitive market.

Because the Products of Firms in a Monopolistically Competitive Market