Question

A monopolistically competitive firm

a.

tries to differentiate its product from competitors' products.

b.

faces a perfectly elastic demand curve for its product.

c.

has more monopoly power in the long run than does a perfectly competitive firm.

d.

is always a retail establishment.

Answer 1

a. tries to differentiate its product from competitors' products.

Step-by-step explanation:

A monopolistic competition is when there are many buyers and sellers of heterogeneous goods and services .

An example of a monopolistic competition is a restaurant.

The demand curve for a monopolistic competition is downward sloping which indicates that the demand is elastic.

If in the short run ,a monopolistic competition earns economic profit, in the long run, new firms would enter in the industry wiping out the economic profit. Therefore, in the long run, a monopolistic competition doesn't operate like a monopoly. A monopoly earns economic profit both in the short and long run.

I hope my answer helps you