The AR curve under monopolistic competition is more elastic because there exists close substitutes of the product sold by the monopolistic firm whereas under monopoly the AR curve is less elastic because there is non availability of close substitutes of the product sold by the monopoly firm.
Why AR curve under monopolistic competition is more elastic than AR curve under monopoly?
Answers
Punit
The AR curve under monopolistic competition is more elastic because there exists close substitutes of the product sold by the monopolistic firm whereas under monopoly the AR curve is less elastic because there is non availability of close substitutes of the product sold by the monopoly firm.