For a profit-maximising monopolistically competitive firm, for the last unit sold, the marginal cost of production is less than the marginal benefit received by a customer from the purchase of that unit.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms have some market power, allowing them to set prices above marginal cost. Therefore, the marginal benefit to the consumer (price) is typically higher than the marginal cost of production for the last unit sold.

For a Profit-Maximising Monopolistically Competitive Firm, for the Last Unit