Firms in monopolistic competition sell their products at a price equal to marginal cost.

Question

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Firms in monopolistic competition do not sell their products at a price equal to marginal cost. Instead, they have some pricing power and charge a price above marginal cost, but below the price charged by their competitors. This is because each firm sells a slightly differentiated product and faces competition from other firms selling similar products.

Firms in Monopolistic Competition Sell Their Products at a Price