For a Monopolistically Competitive Firm the Firm's Demand Curve Is
As entry into the market increases the firms demand curve will continue shifting to the left until it is just tangent to the average total cost curve at the profit maximizing level of output as shown in Figure. Which causes the firms market demand curve to shift to the left. Revmncmp A monopolistically competitive firms demand curve will be least elastic if A there are a large number of rival firms producing very similar products B there are a large number of rival firms producing more. . For the monopolistically competitive firm represented by the graph above the allocatively efficient quantity of output is A Q1 B Q2 C Q3 D Q4 E Q5. The monopolistically competitive firms longrun equilibrium situation is illustrated in Figure.