The downward-sloping demand curve of a monopolistic competitor Multiple Choice A. reflects product differentiation.

B. becomes horizontal in the long run.

C. indicates collusion among the members of the product group.

D. ensures that the firm will produce at minimum average cost in the long run.

Question

Business

Isabella Heath

21 June, 05:11

The downward-sloping demand curve of a monopolistic competitor Multiple Choice A. reflects product differentiation.

B. becomes horizontal in the long run.

C. indicates collusion among the members of the product group.

D. ensures that the firm will produce at minimum average cost in the long run.

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Answers (1)

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Janelle Morton · Answer 1

Answer: The answer is A. Reflects product differentiation.

Explanation: In a monopolistic competition, companies offer products that are not equal. This product differentiation gives companies power in the market and causes each company to face a demand curve with a downward slope (if it raises the price of its product it will sell less and if it lowers it will sell more). Unlike a perfect competition market where companies face a horizontal demand curve.

The downward-sloping demand curve of a monopolistic competitor Multiple Choice A. reflects product differentiation.B. becomes horizontal in the long run.C. indicates collusion among the members of the product group.D. ensures that the firm will produce at minimum average cost in the long run.

The downward-sloping demand curve of a monopolistic competitor Multiple Choice A. reflects product differentiation.

B. becomes horizontal in the long run.

C. indicates collusion among the members of the product group.

D. ensures that the firm will produce at minimum average cost in the long run.