When a monopolistically competitive firm's demand curve shifts leftward,what happens to its marginal revenue curve?
A) Nothing, the marginal revenue curve is unchanged.
B) It disappears.
C) It shifts rightward.
D) It shifts leftward.
E) None of the above is correct because the effect on the marginal revenue curve depends on whether the demand was initially elastic or inelastic.

Question

Quizplus · Accepted Answer

When a monopolistically competitive firm's demand curve shifts leftward, its marginal revenue curve also shifts leftward. This is because the firm will have to lower its price to sell the same quantity of output, which reduces the marginal revenue it earns from each additional unit sold.

When a Monopolistically Competitive Firm's Demand Curve Shifts Leftward,what Happens