For a monopolistically competitive firm,________.

Question

Quizplus · Accepted Answer

In monopolistic competition, the firm has some degree of market power and faces a downward-sloping demand curve. This means that in order to sell more units of output, the firm has to lower its price. Therefore, the marginal revenue (MR) curve lies below the demand curve. Since the MR curve represents the additional revenue earned by the firm for producing and selling one more unit of output, it will always be less than the price it charges for that unit. Therefore, the correct choice is C since the marginal revenue will always be less than the price for a monopolistically competitive firm.

For a Monopolistically Competitive Firm,________