Asked by Keshawn Johnson on Jun 10, 2024
Verified
In monopolistic competition, which of the following would make an individual firm's demand curve less elastic?
A) the purchase of more efficient machinery
B) an increase in the price of the firm's product
C) increased brand loyalty toward the firm's product
D) an increase in the number of rival firms
Demand Curve Elasticity
A measure of how much the quantity demanded of a good responds to a change in its price, indicating its sensitivity.
Brand Loyalty
A consumer's preference to buy a particular brand's product over alternatives consistently.
Monopolistic Competition
A market structure in which many firms sell products that are similar but not identical, allowing for significant control over pricing and some degree of market power.
- Understand the influence of product differentiation and advertising on demand elasticity and the market power of a firm in a monopolistically competitive environment.
Verified Answer
SE
Samantha EsquivelJun 12, 2024
Final Answer :
C
Explanation :
Increased brand loyalty toward the firm's product makes the demand curve less elastic because consumers are more willing to buy the product even if the price increases, showing a stronger preference for the brand over others.
Learning Objectives
- Understand the influence of product differentiation and advertising on demand elasticity and the market power of a firm in a monopolistically competitive environment.