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The student argues that in monopolistic competition, marginal revenue is equal to price when selling an additional unit. However, this is incorrect because the demand curve slopes downward in monopolistic competition. When a firm sells more units, it must lower the price for all units, not just the additional one. Therefore, the marginal revenue from the last unit will be less than the price since the firm receives a lower price on the previous units as well. The key point is that price cannot remain consta

Author

Macxy Tan

Language

EN