The shape and/or slope of the marginal revenue curve under monopolistic competition is
A) U-shaped.
B) horizontal.
C) vertical.
D) upward-sloping.
E) downward-sloping and steeper than the demand curve.

Question

Quizplus · Accepted Answer

The shape and slope of the marginal revenue curve under monopolistic competition is downward-sloping and steeper than the demand curve. This is because, under monopolistic competition, firms can only increase their output by decreasing their price, leading to a larger decrease in revenue compared to the increase in quantity sold. Therefore, the marginal revenue curve is steeper than the demand curve.

The Shape And/or Slope of the Marginal Revenue Curve Under