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

Why is the demand curve of a firm under monopolisticcompetition more e

1.	Why is the demand curve of a firm under monopolisticcompetition more elastic than under monopoly? Explain.
Answer» SOLUTION :Under monopoly there are no close substitutes of the good but under monopolistic competition there are close substitutes of the good in MARKET. Therfore, under monopoly CONSUMERS have no choice other than BUYING the PRODUCT whereas in monopolistic competition, close substitition provide a variety of options for the consumer. It makes the demand under monopolistic competittion more elastic than under monopoly.