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The demand curve of a monopolistically competitive firm A) is horizontal because the firm must cut its price to sell more. B) is perfectly elastic.

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The demand curve of a monopolistically competitive firm A) is horizontal because the firm must cut its price to sell more.

  • The demand curve of a firm that is perfectly competitive is horizontal at the market price.
  • As a result, every unit sold will result in it receiving the same price.
  • The difference in total revenue from selling one more unit at the constant market price is the marginal revenue that the company receives.
  • A monopolistically competitive firm's perceived demand curve slopes downward, indicating that it sets prices and selects a mix of quantity and price.

Why is the demand curve in monopolistic competition more elastic than a monopoly?

Firm's demand curve under monopolistic competition is more elastic than under monopoly because of availability of close substitutes under monopolistic competition.

Learn more about demand curve brainly.com/question/13131242

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