In monopolistic competition ?
Correct answer: D. The marginal revenue is below the demand curve and diverges
- A. Demand is perfectly elastic
- B. Products are homogeneous
- C. Marginal revenue = price
- D. The marginal revenue is below the demand curve and diverges
Explanation
Monopolistic competition gives each firm a downward-sloping demand curve because its product is differentiated, so marginal revenue lies below demand. The curves diverge as output increases, unlike perfect competition where price equals marginal revenue.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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