Because products in a monopolistically competitive business are differentiated, a monopolistically competitive firm must contend with a downward-sloping demand curve.
Because it can set itself apart from its rivals, a company in a monopolistic competitive industry experiences a downward sloping demand curve. Long-term economic profit is zero due to the ease of entry and exit .When a large number of businesses provide rival goods or services that are comparable but imperfect alternatives, monopolistic competition exists. A monopolistic competitive industry has minimal entry requirements, and decisions made by any one firm do not immediately affect those of its rivals. The price and marketing choices made by the rival companies serve as their points of differentiation.
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