In the long run, tangency equilibrium occurs when a monopolistically competitive ﬁrm's average revenue curve is tangent to:

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In the long run, tangency equilibrium for a monopolistically competitive firm occurs when its average revenue curve, which is also its demand curve, is tangent to its average cost curve. This indicates that the firm is producing at a level where it can no longer earn economic profits, as price equals average cost.

In the Long Run, Tangency Equilibrium Occurs When a Monopolistically