The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolistically competitive firm's demand curve slopes downward because:
A)new firms are free to enter the market.
B)there are a large number of firms in the market.
C)a differentiated product gives the firm some monopoly power.
D)the firm has complete information about the market.
E)the firm sells a standardized product.

Question

The figure given below shows the cost and revenue curves of a monopolist.Figure 11.9
  D: Average revenue
MR: Marginal revenue
ATC: Average total cost
MC: Marginal cost
-A monopolistically competitive firm's demand curve slopes downward because:
A)new firms are free to enter the market. 
B)there are a large number of firms in the market. 
C)a differentiated product gives the firm some monopoly power. 
D)the firm has complete information about the market. 
E)the firm sells a standardized product.

Quizplus · Accepted Answer

The demand curve of a monopolistically competitive firm slopes downward because it produces a differentiated product, giving it some monopoly power. As a result, the firm can increase the price of its product above its marginal cost, leading to a downward-sloping demand curve.

The Figure Given Below Shows the Cost and Revenue Curves