A monopolistically competitive firm and a perfectly competitive firm are alike because both types of firms I. face downward sloping demand curves.
II) have marginal revenue curves that lie beneath their demand curves.
III) can make only zero economic profit in the long run.

Question

Quizplus · Accepted Answer

In the long run, both monopolistically competitive and perfectly competitive firms can only make zero economic profit due to the entry of new firms in the market. However, only monopolistically competitive firms face downward-sloping demand curves and have marginal revenue curves below their demand curves.

A Monopolistically Competitive Firm and a Perfectly Competitive Firm Are