A monopolistic competitor is like a monopolist in that:
A) it sells in the inelastic portion of its demand curve.
B) it earns zero economic profit in the long run.
C) the marginal revenue curve lies above the AR curve.
D) it faces a downward-sloping demand curve.

Question

Quizplus · Accepted Answer

A monopolistic competitor faces a downward-sloping demand curve, just like a monopolist. However, it is not guaranteed to earn zero economic profit in the long run and may make profits in the short run. Additionally, it may not necessarily sell in the inelastic portion of its demand curve and may have a marginal revenue curve that lies below the average revenue curve.

A Monopolistic Competitor Is Like a Monopolist in That