Asked by Adrieanna Davis-Coco on Jun 25, 2024

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Why is the monopolistic competitor's demand curve more elastic than a pure monopolist's but less elastic than a pure competitor's? What factors determine the price elasticity of demand for a monopolistic competitor?

Price Elasticity

An indicator of the responsiveness of the quantity demanded of a product or service to variations in its price.

Demand Curve

A visual chart that illustrates how the price of a product affects the amount of the product that consumers are prepared to purchase.

Monopolistic Competitor

A firm in a market structure where many companies sell products that are similar but not identical, allowing for competition based on quality, price, and marketing.

  • Analyze the elasticity of demand for monopolistic competitors and understand the factors that determine it.
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Latifat SulaimonJun 29, 2024
Final Answer :
The monopolistic competitor's demand is more elastic than the demand faced by a pure monopolist because the monopolistically competitive seller competes with many other firms producing close substitutes. The pure monopolist has no rivals at all. The price elasticity of demand faced by the monopolistically competitive firm depends on the number of rivals and the degree of product differentiation. The more rivals and the weaker the product differentiation, the greater the price elasticity of each seller's demand and the closer monopolistic competition will be to pure competition.