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AP® Microeconomics

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Moderate

Pat's Cards Elasticity

APMICR-5SVKGM

Pat owns a novelty card store in a monopolistically competitive industry, and is simultaneously working on getting an Economics degree.

In trying to master the concept of price elasticity of demand, he reviews the price elasticity of his own firm's demand curve and accurately determines that

A

price elasticity varies inversely with the number of competitors and the degree of product differentiation.

B

price elasticity varies directly with the number of competitors and the degree of product differentiation.

C

price elasticity varies directly with the number of competitors, but inversely with the degree of product differentiation.

D

price elasticity varies inversely with the number of competitors, but directly with the degree of product differentiation.

E

price elasticity is not impacted by the number of competitors or the degree of product differentiation