What is the biggest difference between the marginal revenue curve for a monopoly and a monopolistically competitive firm?

What is the biggest difference between the marginal revenue curve for a monopoly and a monopolistically competitive firm?

Select one:

a. Advertising can shift the MR curve

b. Because of product differentiation, monopolistically competitive firms have more elastic demand and MR curves

c. Monopolistically competitive firms are price takers because of the many close substitutes

d. The MR curve is the same as the demand curve in the long run

Solutions

Expert Solution

option b

Because of product differentiation, monopolistically competitive firms have more elastic demand and MR curves

A monopolistic competitive market has many firms with differentiated products so the goods have close substitutes so the demand is elastic but a monopoly is only oe firm in the market and that produces a product with no close substitute so it reduces the elasticity.

Rahul Sunny answered 1 year ago

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