--%>

Why demand curve face monopolistically competition

Why is demand curve facing a monopolistically competitive firm probable to be very elastic?

E

Expert

Verified

Answer: This is because the products generated by monopolistically competitive firms are close substitutes to one other. When products are close substitutes to one other the elasticity of demand is high, that is what makes the firm’s demand curve (that is, under monopolistic competition) much elastic.

   Related Questions in Microeconomics

  • Q : Goals of Firm-Standard economic

    Can someone please help me in finding out the precise answer from the following question. The standard economic assumption which firms attempt to maximize the profit: (i) Is the beginning point for most of the economists’ analyses of how to operate firms. (ii) C

  • Q : Total variable costs of

    Total variable costs of this profit-maximizing lumber mill are approximately: (i) $2000 per day. (ii) $2400 per day. (iii) $2800 per day. (iv) $3200 per day. (v) $3600 per day.

    Q : Problem regarding labor monopsonist The

    The labor monopsonist will hire labor up to the point where the marginal: (1) Revenue product of the labor equivalents the wage. (2) Resource cost of labor equivalents the salary. (3) Revenue product of labor equivalents its marginal resource cost. (4) Resource cost o

  • Q : Characteristics of pure monopoly This

    This is untrue that a firm which is a pure monopoly: (1) commonly engages in extensive advertising to differentiate its products. (2) produces a level of output which is closer to socially optimal when this price discriminates. (3) is the sole produce

  • Q : Find absolute value of the price

    Two thousand four hundred students subscribed to cable TV services while they enrolled like freshmen. 800 of them students dropped the service while the price of cable rose by $25 to $35 per month. The absolute value of the price elasticity of demand

  • Q : Problem on Agency Shop Agreements Can

    Can someone please help me in finding out the accurate answer from the following question. Needs for all the workers to pay union dues or the equivalent are features of collective bargaining agreements that firms will function: (1) An open shop. (2) A closed shop. (3)

  • Q : Labor Productivity The American workers

    The American workers tend to be much productive than their counterparts in the South America or Asia in part as they have: (i) Superior natural genetic endowments. (ii) Access to the better sports programming, that promotes the team-work. (iii) More capital to work wi

  • Q : Components of capital account Elucidate

    Elucidate the components of capital account? Answer: It records are international transactions which occupy a resident of the domestic country changing his assets wi

  • Q : Define money Money : Money is what

    Money: Money is what money does. Or Money is something that is accepted as a medium of exchange and at similar time act as a store of value.

  • Q : Economy in Bulgaria What is the economy

    What is the economy in Bulgaria like?