Which of the following correctly describes a monopolisticall

Which of the following correctly describes a monopolistically competitive industry? Monopolistically competitive industries are efficient. Monopolistically competitive firms face downward-sloping demand curves. Monopolistically competitive industries have prices that are equal to marginal cost. Monopolistically competitive industries have few firm:s For a monopolistically competitive firm in the short run O P O P O p > MC MC P ATC P MR.

Solution

1. The correct answer is B. The demand curve under a monopolistically competitive industry is downward sloping. The correct answer is B.

2. The correct answer is A. As P>MC, this will encourage the entry of more firms until the profits are nullified.