Monopolistic competition can't be as inelastic as monopoly because there are substitutes goods. The product differentiation gives it some monopoly power but there are not as many rival as a perfectly competitive market. Practice drawing the demand curve for a monopolistic competitive firm. Not flat, but negatively sloped, but not as inelastic as monopoly. Somewhere in between Now the analysis from this point on is exactly the same as when we did monopoly.
Marginal revenue is less than price.
It still has to lower the price to all its customers not just the new ones. In this picture there is economic profit. This is a little tricky. The demand curve shifts to the left. Here is why.