Final answer:
The answer to the student's question is (b) monopolistic competition where firms face a downward-sloping demand curve for their products, as they have some degree of market power and product differentiation that allows them to set prices above marginal cost.
Step-by-step explanation:
The market structures of perfect competition and monopolistic competition are distinguished by the different demand curves faced by individual firms within these markets. In perfectly competitive markets, firms face a perfectly elastic demand curve, indicating that a firm can sell any quantity of its product at the prevailing market price without needing to change the price.
Therefore, the demand curve for a perfectly competitive firm is horizontal, reflecting that the firm is a price taker. In contrast, firms in monopolistic competition face a downward-sloping demand curve, recognizing that they are price makers to some extent and can influence the market price through changes in their product's quantity or through differentiation.