In the long run, a firm in monopolistic competition ________ a markup of price over marginal cost, and a firm in perfect competition ________ a markup of price over marginal cost.

Question

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In monopolistic competition, firms have some degree of market power, allowing them to charge a price above marginal cost, resulting in a markup. In perfect competition, firms are price takers and cannot charge above the market price, which equals marginal cost, so they do not have a markup of price over marginal cost.

In the Long Run, a Firm in Monopolistic Competition ________