{"id":47216,"date":"2024-04-15T22:23:35","date_gmt":"2024-04-15T22:23:35","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=47216"},"modified":"2024-04-15T22:23:35","modified_gmt":"2024-04-15T22:23:35","slug":"in-monopolistic-competition-we-expect","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/in-monopolistic-competition-we-expect\/","title":{"rendered":"In monopolistic competition we expect-"},"content":{"rendered":"

[amp_mcq option1=”low cross elasticity of demand” option2=”zero cross elasticity of demand” option3=”infinite cross elasticity of demand” option4=”unit cross elasticity of demand equal to one” correct=”option1″]<\/p>\n

The correct answer is A. low cross elasticity of demand.<\/p>\n

In monopolistic competition, firms produce differentiated products, which means that there are substitutes for their products. However, these substitutes are not perfect, which means that consumers have some degree of brand loyalty. As a result, the cross elasticity of demand for a monopolistically competitive firm’s product is low. This means that if the price of a substitute product changes, it will have a relatively small impact on the demand for the monopolistically competitive firm’s product.<\/p>\n

Option B is incorrect because it would imply that there are no substitutes for the monopolistically competitive firm’s product. This would mean that the firm has a monopoly, which is not the case in monopolistic competition.<\/p>\n

Option C is incorrect because it would imply that the monopolistically competitive firm’s product is a perfect substitute for all other products. This is not the case in monopolistic competition, as there are always some differences between products, even if they are close substitutes.<\/p>\n

Option D is incorrect because it would imply that the monopolistically competitive firm’s product is a perfect complement to all other products. This is not the case in monopolistic competition, as products are not typically complements.<\/p>\n","protected":false},"excerpt":{"rendered":"

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