Asked by Nicole Nagatoshi on Jun 24, 2024
Verified
The larger the number of firms and the smaller the degree of product differentiation, the
A) greater the divergence between the demand and the marginal revenue curves of the monopolistically competitive firm.
B) larger will be the monopolistically competitive firm's fixed costs.
C) less elastic is the monopolistically competitive firm's demand curve.
D) more elastic is the monopolistically competitive firm's demand curve.
Product Differentiation
The process of distinguishing a product from others in the market to attract a specific target market.
Demand Curve
A graphical representation showing the relationship between the price of a good and the quantity of that good that consumers are willing and able to purchase at various prices.
- Acquire knowledge on how demand fluctuates in monopolistically competitive markets.
- Analyze the impact of the number of firms and degree of product differentiation on market dynamics.
Verified Answer
AB
Arevalo BotchokJun 26, 2024
Final Answer :
D
Explanation :
The more firms there are and the less differentiated the products are, the more substitutes are available, making the demand curve more elastic since consumers can easily switch to other products.
Learning Objectives
- Acquire knowledge on how demand fluctuates in monopolistically competitive markets.
- Analyze the impact of the number of firms and degree of product differentiation on market dynamics.
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