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Which of the Following Best Explains Why Monopolistically Competitive Firms

Question 267

Multiple Choice

Which of the following best explains why monopolistically competitive firms face a downward sloping demand curve while perfectly competitive firms do not?


A) Monopolistically competitive firms sell a differentiated good.
B) Monopolistically competitive industries have only a few firms.
C) Monopolistically competitive firms have barriers to entry.
D) Only industries with free entry and exit have firms that face horizontal demand curves.

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