In general, the demand curve facing the monopolistically competitive firm is more elastic than the demand curve facing the monopoly.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good consumers are willing and able to purchase at various prices.

Monopolistically Competitive

A market structure characterized by many firms selling products that are similar but not identical, leading to competition based on product differentiation.

Monopoly

A market structure where a single firm controls the entire market for a particular good or service.

Understand the attributes of demand and marginal revenue curves encountered by a firm in monopolistic competition and their consequences for decisions on production and price setting.
Comprehend the unique characteristics that differentiate monopolistically competitive markets from both perfectly competitive and monopolistic markets.

Verified Answer

Shahd RashadJul 14, 2024

Final Answer :

True

Explanation :

In monopolistic competition, firms have some degree of market power but there are many substitutes, making the demand curve more elastic compared to a monopoly, where a single firm dominates with fewer substitutes available.

Learning Objectives

Understand the attributes of demand and marginal revenue curves encountered by a firm in monopolistic competition and their consequences for decisions on production and price setting.
Comprehend the unique characteristics that differentiate monopolistically competitive markets from both perfectly competitive and monopolistic markets.

In general, the demand curve facing the monopolistically competitive firm is more elastic than the demand curve facing the monopoly.

Definitions

Learning Objectives

Learning Objectives

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