The downward sloping demand curve for a monopolistically competitive firm
Asked by admin @ in Business viewed by 275 People
Since a monopolistically competitive firm faces a downward-sloping demand curve, its price will be _____ revenue
Answered by admin @
Answer:
greater than marginal revenue
Explanation:
In a monopolistic competitive market the firm charges price that would exceed the marginal cost. However, in such competition the profit is maximised where marginal revenue equals marginal cost.
Therefore, in the situation where the firm faces downward-sloping demand curve the price would need to increase in order to exceed the marginal cost and would result in it being greater than the marginal revenue.
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