The larger the number of firms and the smaller the degree of product differentiation the .a. greater the divergence between the demand and the marginal revenue curves of the monopolistically competitive firm. b. larger will be the monopolistically competitive firm's fixed costs. c. less elastic is the monopolistically competitive firm's demand curve. d. more elastic is the monopolistically competitive firm's demand curve.

D. more elastic is the Monopolistic competitive firm's demand curve

Explanation:

Monopolistic competitive firm's market power stems from the fact that they sell differentiated product with no close substitute and they are protected by  market entry barriers preventing other firms from entering the market.

Product differentiation and market entry barriers allows firms to change prices and still make profits because they are facing a demand  that is inelastic as consumers do not have much of a choice but to buy the product of the monopolistic competitive firm.

When the number of firms in the market increases and products become  less differentiated, the monopolistic competitive firm losses its grip on the market, The firm looses its Market power.

The monopolistic  competitive firm will now face a demand curve that is more elastic because consumers now have a choice since there is a large number of firms in the market with a low  degree of product differentiation.

the larger the number of firm and smaller degree of product differentiation the more elastic is the monopolistic firm's demand curve

Step-by-step explanation:

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