Which of the following is a distinction between perfectly competitive and monopolistic competition?

A. Perfectly competitive firms must compete with rival sellers; monopolistically competitive firms do not confront rival sellers.
B. Monopolistically competitive firms can raise their price without losing sales; perfectly competitive firms must lower their price in order to sell more of their product.
C. Perfectly competitive firms confront a perfectly elastic demand curve; monopolistically competitive firms face a downward-sloping demand curve.
D. Perfectly competitive firms may make either economic profits or losses in the short run, but monopolistically competitive firms always earn an economic profit.

Answer: C

Economics

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