Table of contents

0. Basic Principles of Economics1h 5m
1. Reading and Understanding Graphs59m
2. Introductory Economic Models1h 10m
3. The Market Forces of Supply and Demand2h 26m
4. Elasticity2h 26m
5. Consumer and Producer Surplus; Price Ceilings and Floors3h 45m
6. Introduction to Taxes and Subsidies1h 46m
7. Externalities1h 12m
8. The Types of Goods1h 13m
9. International Trade1h 16m
10. The Costs of Production2h 35m
11. Perfect Competition2h 23m
12. Monopoly2h 13m
13. Monopolistic Competition1h 9m
14. Oligopoly1h 26m
15. Markets for the Factors of Production1h 26m
16. Income Inequality and Poverty35m
17. Asymmetric Information, Voting, and Public Choice39m
18. Consumer Choice and Behavioral Economics1h 16m

13. Monopolistic Competition

Revenue in Monopolistic Competition

Microeconomics

13. Monopolistic Competition

Revenue in Monopolistic Competition

Next problem

Struggling with Microeconomics?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following statements is true?

A monopolistically competitive firm's demand curve is equal to the market demand curve.

For a monopolistically competitive firm, an increase in the quantity sold will always increase total revenue.

The barriers to market entry in perfect competition are more stringent than those for monopolistic competition.

A monopolistically competitive firm's marginal revenue is less than its average revenue.

Next problem

Verified step by step guidance

Understand the characteristics of a monopolistically competitive market: Many firms, differentiated products, and free entry and exit.

Recall that in monopolistic competition, each firm faces a downward-sloping demand curve due to product differentiation, unlike perfect competition where firms are price takers.

Recognize that for a monopolistically competitive firm, the marginal revenue (MR) is less than the price (or average revenue, AR) because the firm must lower the price to sell additional units, which affects all units sold.

Analyze why the statement 'A monopolistically competitive firm's marginal revenue is less than its average revenue' is true: As the firm sells more, the price effect on existing units causes MR to be less than AR.

Compare this with perfect competition, where MR equals AR, and understand that the presence of product differentiation in monopolistic competition leads to the MR being less than AR.