In the long run, a firm in monopolistic competition will produce

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In the long run, a firm in monopolistic competition will produce at a point where price equals average total cost to make normal profits, but due to product differentiation and lack of perfect competition, it's unlikely to be at the minimum point of the average total cost curve. This is because firms in monopolistic competition have some degree of market power which allows them to set prices above marginal cost, but in the long run, the entry of new firms erodes this power, pushing prices down to average total costs.

In the Long Run, a Firm in Monopolistic Competition Will