In the long run, marginal cost must equal marginal revenue for a monopolistic competitive firm, but not at the minimum point of the long-run average cost curve.

Question

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A monopolistic competitive firm maximizes profits where marginal cost equals marginal revenue. However, this does not necessarily occur at the minimum point of the long-run average cost curve, as there may still be excess capacity in the market.

In the Long Run, Marginal Cost Must Equal Marginal Revenue