The shape and/or slope of the marginal revenue curve under monopolistic competit

Question

The shape and/or slope of the marginal revenue curve under monopolistic competition, assuming a linear market demand, is:

A.) horizontal B.) vertical   C.) U-shaped   D.) upward-sloping   E.) downward-sloping and twice as steep as the market demand curve

Similarly, monopolistic competition is like monopoly in that:

A.) neither industry has high barriers to entry   B.) both industries represent price-taking firms   C.) price changes are dictated by changes in supply D.) both industries have high barriers to entry   E.) both industries represent price-making firms.

Explanation / Answer

The shape and/or slope of the marginal revenue curve under monopolistic competition, assuming a linear market demand, is horizontal. The correct answer is option (A).

Similarly, monopolistic competition is like monopoly in that  price changes are dictated by changes in supply. The correct answer is option (C).

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