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The Do It Yourself Hardware Store is a monopolistically competitive firm. Its marginal revenue curve A. lies below its demand curve intersecting the quantity axis at the same point at which the demand
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The Do It Yourself Hardware Store is a monopolistically competitive firm. Its marginal revenue curve

A. lies below its demand curve intersecting the quantity axis at the same point at which the demand curve intersects it.
B. is below its demand curve if demand is elastic and above the demand curve if demand is inelastic.
C. is identical to its demand curve.
D. lies below its demand curve intersecting the quantity axis midway between the origin and the point at which the demand curve intersects it.

User Lini Sax
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Answer: The marginal curve lies below its demand curve intersecting the quantity axis midway between the origin and the point at which the demand curve intersects it.

Explanation:The marginal curve is negatively sloped because a monopolistic competitive firm is a price taker. Firms in a monopolistic competitive market are similar and are only differentiated by the physical appearance of the product and marketing strategy of the firm, this mean the competition is stiff and in order to sell an extra unit of a product the firm must reduce its selling price just a little below the prevailing market price or price of competitors. Hence, Marginal revenue is lower than Average revenue

User Davejoem
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