📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    âš¡ Month End Offer - Flat 52% Off On All Courses! Enroll Now âš¡
    00:00:00 AM Left

    Question

    As the degree of product differentiation increases among

    the products sold in a monopolistically competitive industry, which of the following occurs?
    A The cost of production falls Correct Answer Incorrect Answer
    B The amount of marketing expenditures decreases for each firm. Correct Answer Incorrect Answer
    C The demand curve for each seller's product becomes more horizontal Correct Answer Incorrect Answer
    D Each seller's demand becomes more inelastic Correct Answer Incorrect Answer
    E All of the above Correct Answer Incorrect Answer

    Solution

    As the degree of product differentiation increases among the products sold in a monopolistically competitive industry, each seller's demand becomes more inelastic. This is because products now no longer have close substitutes so demand becomes more inelastic.

    Practice Next
    More Research Questions
    ask-question