The downward-sloping demand curve of a monopolistic competitor
A) reflects some level of control over its own price.
B) becomes eventually horizontal in the long run.
C) indicates collusion among the members of the product group.
D) ensures that the firm will produce at minimum average cost in the long run.

Question

Quizplus · Accepted Answer

The downward-sloping demand curve of a monopolistic competitor indicates that the firm has some level of control over its own price. Unlike perfect competition, where firms have no control over price and must accept the market price, monopolistic competitors can slightly increase or decrease their prices in response to changes in demand.

The Downward-Sloping Demand Curve of a Monopolistic Competitor