The greater the differentiation among products of the monopolistically competitive firms,the less price-elastic is the demand.

Question

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In monopolistic competition, firms produce differentiated products that are not perfect substitutes for each other. As a result, consumers have a certain degree of loyalty towards a particular brand or product, making the demand less price-elastic. This means that even if the price of a particular brand increases, consumers may still be willing to pay that price because they value the unique characteristics of that particular product. Therefore, the greater the differentiation among products of the monopolistically competitive firms, the less price-elastic is the demand.

The Greater the Differentiation Among Products of the Monopolistically Competitive