Which of the following best explains why the demand curve facing a firm in a monopolistically competitive market is downward-sloping, yet significantly more elastic than that facing a pure monopolist?
- The existence of close, but non-identical, substitutes produced by competing sellersCevap
- BThe rule that marginal revenue equals price at all possible output levels
- CThe mutual interdependence among a few large firms operating under a kinked demand curve
- DThe shift in total demand caused purely by changes in fixed production costs
Cevap
The demand curve facing a firm under monopolistic competition is downward-sloping due to product differentiation (brand, quality, packaging), giving the firm some price-setting power. However, because many rivals offer close substitutes, consumers can easily switch if prices rise, making the demand curve significantly more elastic than a pure monopoly's demand curve.
Under monopolistic competition, product differentiation allows firms to set prices above marginal cost, causing the demand curve to slope downward. However, because there are many rival firms producing close substitutes, the demand curve is much flatter (more elastic) than that of a pure monopoly.
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Anahtar Kavram
Demand Elasticity under Monopolistic Competition