A monopolistic competitor faces a __________ demand curve and its price is __________ marginal revenue.
A)horizontal; equal to
B)downward-sloping; equal to
C)horizontal; greater than
D)downward-sloping; greater than

Question

Quizplus · Accepted Answer

A monopolistic competitor faces a downward-sloping demand curve because it sells a differentiated product, and its price is greater than marginal revenue because it must lower the price on all units sold to sell an additional unit, leading to a marginal revenue that is less than the price.

A Monopolistic Competitor Faces a __________ Demand Curve and Its