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Non-Competitive Markets — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsNon-Competitive Markets3 Marks
Question
Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.
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Answer

A monopolistic firm has differentiated products; thus, it has to lower its price in order to increase its sales. The products of different monopolistic firms are close substitutes to each other. Hence, the demand for all the products is elastic. For this reason, the demand curve is negatively sloped.

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