In the long run, a firm in monopolistic competition will have only normal profit and will operate a plant slightly smaller than it would have under perfect competition.

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In monopolistic competition, firms have some market power due to product differentiation, but in the long run, the entry of new firms erodes any economic profits, leading to only normal profits. Due to product differentiation and the lack of perfect substitutes, firms often face downward-sloping demand curves, meaning they don't produce at minimum average total cost, resulting in a slightly smaller scale of operation compared to a perfectly competitive firm, which operates where price equals minimum average total cost.

In the Long Run, a Firm in Monopolistic Competition Will