Final answer:
In monopolistic competition, demand is more elastic than in monopoly markets and less elastic than in perfectly competitive markets, reflecting the availability of substitutes and the pricing power of firms.
Step-by-step explanation:
In a monopolistically competitive market, the demand curves faced by firms are more elastic than those faced by monopolies but less elastic than those faced by perfectly competitive firms. This level of elasticity indicates that while monopolistically competitive firms can lose or gain customers by changing prices, the effect is not as drastic as it would be for perfect competitors, who face a perfectly elastic demand. Moreover, monopolistically competitive firms face more elasticity in demand compared to monopolies due to the availability of close substitutes, which gives consumers the option to switch to other products if prices increase.
The demand curve faced by a monopolistically competitive firm is more elastic than that faced by monopolies, but less elastic than that faced by perfectly competitive firms. In a monopolistically competitive market, competitors offer close substitutes, which means that when a monopolistically competitive firm raises its price, some consumers may choose not to purchase the product but will instead buy a similar product from another firm.