Some firms exit an industry characterized by monopolistic competition. we would expect the demand curve of a firm already in the industry to be the right.
Monopolistic competition
In a market where entry and exit are simple, monopolistic competition is characterized by a large number of businesses producing comparable but differentiating goods.
Due to the downward-sloping demand curve that monopolistically competitive firms must contend with, their marginal revenue curve is also downward-sloping and rests below the demand curve. Thus, to examine a monopsony's short-term decisions, we can use the monopoly model that we have already created.
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