Under Monopolistic competition the cross elasticity of demand for the product of a single firm would be: 
  • a)
    Infinite
  • b)
    Highly elastic 
  • c)
    Highly inelastic 
  • d)
    Zero
Correct answer is option 'D'. Can you explain this answer?

CA Foundation Question

4 Answers
Dilpreet Singh answered Jun 13, 2018
The cross elasticity of demand for the product of a monopolist with respect to a fall in the price of the other products in the economy is very low or zero.


In monopolistic competition the cross elasticity of demand for the product of a single firm with respect to a change in the price of other products made in the monopolistic ‘group’ is very high.

Tushar Bante answered Jan 01, 2019
For a single firm it is negligible that is 0 and for industry it is elastic

Sumair Sadiq answered Jan 02, 2019
Because under monopolist compitition there are product differentiation

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