A Monopolistically Competitive Firm in the Short and Long Run a Observations(short-run e Downward sloping demand--differentiated product Demand is relatively elastic--good substitutes ●MR<P o Profits are maximized when Mr= mc e This firm is making economic profits Chapter 12 Slide 10Chapter 12 Slide 10 n Observations (short-run) l Downward sloping demand--differentiated product l Demand is relatively elastic--good substitutes l MR < P l Profits are maximized when MR = MC l This firm is making economic profits A Monopolistically Competitive Firm in the Short and Long Run