to purchase the product at all, but others will choose to buy a similar product from another firm. If a

monopolistic competitor raises its price, it will not lose as many customers as would a perfectly competitive

firm, but it will lose more customers than would a monopoly that raised its prices.

At a glance, the demand curves that a monopoly and a monopolistic competitor face look similar—that is, they

both slope down. However, the underlying economic meaning of these perceived demand curves is different,

because a monopolist faces the market demand curve and a monopolistic competitor does not. Rather, a

monopolistically competitive firm’s demand curve is but one of many firms that make up the “before” market

demand curve. Are you following? If so, how would you categorize the market for golf balls? Take a swing, then

see the following Clear It Up feature.

CLEAR IT UP
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