Since a firm operating in a monopolistically competitive market faces a downward-sloping demand curve, it is generally the case that: A)P = MR. B)P MR. D)P = TR.

Question

Since a firm operating in a monopolistically competitive market faces a downward-sloping demand curve, it is generally the case that:
A)P = MR.
B)P < MR.
C)P> MR.
D)P = TR.

Quizplus · Accepted Answer

In a monopolistically competitive market, the price (P) is greater than marginal revenue (MR) because each firm faces a downward-sloping demand curve. This means that to sell additional units, the firm must lower the price, which causes MR to be less than the price.

Since a Firm Operating in a Monopolistically Competitive Market Faces