An Italian restaurant is profit-maximizing firm in monopolistic competition differs from a firm in perfect competition because the firm in monopolistic competition:

Question

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A firm in monopolistic competition faces a downward sloping demand curve for its product, which means it has some degree of market power to set its price. This is unlike a firm in perfect competition, which faces a perfectly elastic demand curve and has no market power to set its price. However, a firm in monopolistic competition still faces competition from other firms, meaning it may not be able to earn economic profits in the long run.

An Italian Restaurant Is Profit-Maximizing Firm in Monopolistic Competition Differs