A monopolistically competitive firm differs from a perfectly competitive firm in the long run in that

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A monopolistically competitive firm faces a downward sloping demand curve as it produces a product that is differentiated from its competitors, while a perfectly competitive firm faces a horizontal demand curve as it produces an identical product. Therefore, the two types of firms differ in terms of the shape of their demand curve in the long run. B, C, and D are incorrect because they do not reflect the main difference between the two types of market structures. In particular, profits can be positive or negative for both monopolistically competitive and perfectly competitive firms in the short run, but they tend to approach zero in the long run for both types of firms due to entry and exit of firms in response to profits or losses. Moreover, the marginal cost equals the market price for both types of firms in the long run under certain conditions, such as in a constant-cost industry.

A Monopolistically Competitive Firm Differs from a Perfectly Competitive Firm