Each firm in a monopolistically competitive industry faces a downward-sloping demand curve because
A)there are many other sellers in the market.
B)there are very few other sellers in the market.
C)the firm's product is different from those offered by other firms in the market.
D)the firm faces the threat of entry into the market by new firms.

Question

Quizplus · Accepted Answer

In a monopolistically competitive market, firms produce differentiated products, meaning that each firm has a unique product that is not exactly the same as any other firm's product. As a result, each firm faces a downward-sloping demand curve because consumers have some preference for their specific product over others in the market.

Each Firm in a Monopolistically Competitive Industry Faces a Downward-Sloping