aluminum and steel in the manufacture of automobile parts. B, price inoreases by

Question

aluminum and steel in the manufacture of automobile parts. B, price inoreases by a firm that are ignored by its rivals. C advertising. product promotion, and changes in the real or perceived characteristics of a produci D, reductions in production costs that are not reflected in price reductions. 25. A monopolistically competitive firm has a: A. highly elastic demand curve. B highly inelastic demand curve C. perfectly inelastic demand curve. D perfectly elastic demand curve. 26. The monopolistically competitive setler's demand curve will become more elastic the: A. more significant the barriers to entering the industry B. greater the degree of product differentiation. C. larger the number of competitors. D. smaller the number of competitors

Explanation / Answer

Q25

answer

Option A

The demand curve is highly elastic because the firm produce at the portion of elastic demand curve as the profit maximizing is at MR=MC and MC is not negative so the MR is positive and the MR is positive up to the elastic demand curve.

Q26

Option C

The more elastic because there are many sellers and the more substitutes for the product are available in the market.

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