[amp_mcq option1=”Perfectly elastic” option2=”Elastic” option3=”Unit elastic” option4=”Inelastic” correct=”option2″]<\/p>\n
The correct answer is: B. Elastic.<\/p>\n
A monopolistically competitive firm faces a downward-sloping demand curve, but it is more elastic than the demand curve faced by a monopoly. This is because there are other firms in the market that produce similar products, so if a monopolistically competitive firm raises its price, consumers will have more options to choose from and will be more likely to switch to a competitor.<\/p>\n
A perfectly elastic demand curve is a theoretical concept that describes a situation in which a firm can sell as much or as little of its product as it wants at the same price. This is because there are an infinite number of firms in the market that produce identical products, so if a firm raises its price, consumers will simply buy from one of the other firms.<\/p>\n
A unit elastic demand curve is a demand curve with a price elasticity of demand equal to 1. This means that if a firm raises its price by 1%, it will sell 1% less of its product.<\/p>\n
An inelastic demand curve is a demand curve with a price elasticity of demand less than 1. This means that if a firm raises its price by 1%, it will sell less than 1% less of its product.<\/p>\n","protected":false},"excerpt":{"rendered":"
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