Monopolistically competitive firms ________ because in long-run equilibrium price is ________ marginal cost.

Question

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In monopolistic competition, firms have some control over price because they sell differentiated products. This leads to a situation where, in the long run, price is greater than marginal cost, indicating an inefficient allocation of resources. This is because, in a perfectly competitive market, price equals marginal cost in long-run equilibrium, reflecting an efficient use of resources.

Monopolistically Competitive Firms ________ Because in Long-Run Equilibrium Price Is