The demand curve for a monopolistically competitive firm is

Question

Quizplus · Accepted Answer

The demand curve for a monopolistically competitive firm is less elastic than the demand curve of a perfectly competitive firm. This is because a monopolistically competitive firm has some degree of market power, which allows it to raise its price without losing all of its customers. However, since there are close substitutes available, the firm cannot raise its price too much or customers will switch to a competitor. Therefore, the demand curve is relatively elastic, but not as elastic as in a perfectly competitive market where firms are price takers.

The Demand Curve for a Monopolistically Competitive Firm Is