Modest shifts of the market marginal cost curve will have no impact on the production decision of a monopolistically competitive firm.

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Quizplus · Accepted Answer

Modest shifts in the market marginal cost curve will affect the price that a monopolistically competitive firm charges, and as a result, the firm's production decision. This is because monopolistically competitive firms face downward sloping demand curves, which means that they have some market power to influence the price of their products. If the market marginal cost curve shifts, this will affect the price that the firm can charge and therefore, its profit-maximizing level of production.

Modest Shifts of the Market Marginal Cost Curve Will Have