Since the demand curve faced by a monopolistically competitive firm is downward sloping,
A)the firm is a price-taker in the short run
B)in the long run there will be excess capacity
C)the output decisions of one firm will influence profits of all other firms
D)the product in the market is viewed by consumers as being standardized
E)the ATC curve is U-shaped

Question

Quizplus · Accepted Answer

In the long run, monopolistically competitive firms face excess capacity because they do not produce at the minimum point of the ATC curve due to the downward-sloping demand curve.

Since the Demand Curve Faced by a Monopolistically Competitive Firm