Which of the following is likely to have a demand curve that is the least elastic?

A. Demand for the perfectly competitive firm's output.

B. Demand for the oligopoly firm's output with a homogeneous product.

C. Demand for the oligopoly firm's output with a differentiated product.

D. Demand for the monopolistically competitive firm's output.

E. Demand for the monopoly firm's output.

The answer is E. Another way of saying this, that the monopoly firm's output is the most inelastic. Since consumers can only purchase the product from a firm with little to no competition, they will be more likely to still purchase the product even the price increases.

Answer A is incorrect because the demand for a perfectly competitive firm's output is perfectly elastic. For a good to be perfectly competitive, consumers must consider all the products in the market to be identical and perfectly substitutable. The markets for apples and oranges are good examples of this. Answers B and C are incorrect since a consumer could substitute their purchases to the other firm if there was a price increase, which adds some elasticity to the demand curve. Answer D is incorrect since there are many firms in the market selling similar, yet differentiated products. A consumer could just purchase a slightly different product if the price increased.