As new firms enter a monopolistically competitive industry, the demand curve facing each existing firm will
A. shift to the left and become less elastic because there are now more substitutes for its product.
B. not be affected because the new firms do not produce a perfect substitute for its product.
C. shift to the left, but the elasticity of demand will not be affected.
D. shift to the left and become more elastic because there are now more substitutes for its product.
Answer: D
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