Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition

-(Exhibit: Profit Maximization in Monopolistic Competition).When the demand curve for a firm in monopolistic competition shifts, the marginal revenue curve:
A) must shift too.
B) shifts in the opposite direction.
C) will stay the same.
D) will shift, but the profit-maximizing quantity will not change.

Question

Use the following for questions 22-31.
Exhibit: Profit Maximization in Monopolistic Competition
 
-(Exhibit: Profit Maximization in Monopolistic Competition).When the demand curve for a firm in monopolistic competition shifts, the marginal revenue curve:
A) must shift too. 
B) shifts in the opposite direction. 
C) will stay the same. 
D) will shift, but the profit-maximizing quantity will not change.

Quizplus · Accepted Answer

In monopolistic competition, the demand curve and the marginal revenue (MR) curve are directly related. When the demand curve shifts, the MR curve must also shift because the MR curve is derived from the demand curve. Changes in demand directly affect the quantity sold and the price, which in turn affects marginal revenue.

Use the Following for Questions 22-31