Under monopolistic competition the cross elasticity of demand for the product of a single firm is _________.

infinite

No worries! We‘ve got your back. Try BYJU‘S free classes today!

highly elastic

Right on! Give the BNAT exam to get a 100% scholarship for BYJUS courses

highly inelastic

No worries! We‘ve got your back. Try BYJU‘S free classes today!

zero

No worries! We‘ve got your back. Try BYJU‘S free classes today!

Open in App

Solution

The correct option is B highly elastic
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.

Suggest Corrections

Similar questions

Why is the demand curve of a firm under monopolistic competition more elastic than under monopoly? Explain.

Q. How is the demand curve under monopolistic competition different from demand curve of a firm under perfect competition?

Compare demand curves facing a seller under conditions of perfect competition, monopolistic competition and monopoly, clearly reflecting the difference in their elasticities. Draw 3 curves in a single diagram.

Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.

Why is the average revenue curve of a monopolist less elastic than the average revenue curve of a firm under monopolistic competition? Explain.

Join BYJU'S Learning Program