A monopolististically competitive firm a tries to differenti

A monopolististically 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.

Solution

Answer:- B.

A monopolistically competitive firm faces a perfectly elastic demand curve for its products.

In long run in Monopolistically market more company can enter in market, which attarct the profit opportunities and in this market there is no barrier on entry new firm in the market, in long run. When the more firm enter in that market, the demand curve will be shifted to left and then it will became a perfectly elastic demand.

why not Option A, C and D

OPtion A- In monopolistic market, there is only one supplies and lots of demand, and if there is one supplies than, there is no option for differentiate its product from competitior, because there is no competitior as well.

Option C :- Monoploy market didn\'t have power in the long run, because there is no barrier in entry in the long runn market.

Option D - It always a retail establisment, no it may be wholesellar of its product.