Practicing Success
Price elasticity of demand under monopoly as compared to monopolistic competition is |
Relatively elastic Relatively inelastic Zero Infinity |
Relatively inelastic |
Demand under monopoly is relatively inelastic. A little change in price will not lead to a huge change in demand. If monopolist increases the price, consumers cannot reduce demand significantly because there is only a single seller whereas if a firm in monopolistic competition increases the price, consumers can easily switch to competitors leading to a much more change in demand. |