A firm in monopolistic competition has ________ demand curve.
A) a downward sloping
B) an upward sloping
C) a vertical
D) a horizontal
E) a U-shaped

Question

Quizplus · Accepted Answer

Firms in monopolistic competition face a downward sloping demand curve because they have a degree of market power that allows them to set their own price to some extent. However, they still face competition from other firms in the industry, which limits their ability to raise prices too high. As a result, the demand curve is downward sloping, but not as steep as it would be for a monopoly.

A Firm in Monopolistic Competition Has ________ Demand Curve