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A monopolistically competitive firm's demand curve will be least elastic when its products are unique and have few close substitutes, leading to less responsiveness to price changes by consumers.

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5mo ago

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Why is the demand curve facing a monopolist less elastic than one facing a firm that operates in a monopolistically competitive market?

In a monopoly, the monopolist company is the only product in the market place. However, a company competing in a monopolistically competitive market has multiple "similar" competitors that all try and differentiate themselves with specialized or additional services; i.e. the Italian restaurant serving food only from northern Italy. These companies may be a monopoly in the sense that their niche product is one-of-a-kind, but there are substitute products that can replace them if their price becomes too high to the consumer. As a result, the firm in a monopolistically competitive has a more elastic demand than a true monopolist.


A firm in a monopolistically competitive market is similar to a monopolist in the sense that it?

faces a downward-sloping demand curve


Does monopolistically competitive firms have horizontal marginal cost curve?

No it does not. Only Perfectly Competitive firms have a horizontal Marginal Cost curve, which is also there demand curve.


What type of curve does the perfectly competitive firm face?

perfectly elastic demand function.


The labor demand curve of a purely competitive seller perfectly elastic?

yes the demand curve is perfectly inelastic and horizontal


Why is it that firms can earn profits in the long run in monopoly and oligopoly but not in monopolistic competition and perfect competition?

Because monopolistically competitive firms have an optimal production allocation at monopoly values: marginal revenue = marginal cost, marking-up to the demand function. When competition is not perfect, marginal revenue does not equal demand but is always below it on a Cartesian plane, so the optimal production value of a monopolistically competitive firm is both less and at a higher price than a perfectly competitive one.


Is it true the demand curve of a monopolistic competitive firm is more elastic than that of a pure monopolist?

YES


Demand and its types?

Perfectly inelastic demand, perfectly elastic demand, elastic demand, inelastic demand etc.


When demand is elastic?

The demand is elastic when the price is low. So people will buy more good so that it's demand will become more elastic. Moreover ,the demand is elastic when there are some new inventions.


When a firm's marginal revenue is zero what can be said about the elasticity of demand for the output of the firm A. Demand is inelastic. B. Demand is elastic. C. Demand is unit elastic.?

Demand is unit elastic.


How do monopolistically competitive firms earn profits?

Monopolistically competitive firms earn profits by differentiating their products, allowing them to charge higher prices than those in perfectly competitive markets. They attract customers through unique features, branding, or quality, leading to a downward-sloping demand curve. In the short run, if the price exceeds average total costs, they can earn economic profits. However, in the long run, the entry of new firms typically erodes these profits, as they offer similar products and increase competition.


Is fruit elastic or inelastic demand?

elastic

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