A monopolistically competitive firm is like a perfectly competitive firm insofar as

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Both monopolistically competitive firms and perfectly competitive firms do not have high barriers to entry, meaning that new firms can easily enter the market. However, monopolistically competitive firms differ from perfectly competitive firms in that they do not face perfectly elastic demand (choice A) - their demand curve is downward sloping due to their ability to differentiate their product. Also, monopolistically competitive firms typically do not earn an economic profit in the long run (choice B) as their excess profits attract new firms to enter the market, increasing competition and driving down prices. Finally, monopolistically competitive firms have MR curves that lie below their demand curves (choice C) due to diminishing marginal revenue as the firm increases output.

A Monopolistically Competitive Firm Is Like a Perfectly Competitive Firm