Highly elastic negatively sloped demand curve is related to ______.

monopoly

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monopolistic competition

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perfect competition

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both (a) and (b)

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Solution

The correct option is C monopolistic competition
In monopolistic competition, the elasticity of average revenue curve is more than one which denotes that the change in average revenue due to a unit change in the price for which it is sold in more than one due to high competition and close substitutes in this market. Therefore, the demand curve is highly elastic and negatively sloped in this market.

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