In long-run equilibrium,a monopolistically competitive industry operates where

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In long-run equilibrium, a monopolistically competitive industry operates where LRAC > minimum average cost. This is because firms in a monopolistically competitive industry have some market power and can charge a markup over their costs. However, this markup is not so large that it eliminates all competition, so firms cannot charge a price that is higher than the minimum average cost. Therefore, in long-run equilibrium, firms in a monopolistically competitive industry will produce at a point where LRAC is greater than minimum average cost, but not so much greater that they are not able to compete.

In Long-Run Equilibrium,a Monopolistically Competitive Industry Operates Where