Toby operates a small deli downtown.The deli industry is monopolistically competitive.Toby tells you that his and every other deli in town is producing the quantity that minimizes their average total cost.Assuming the delis are maximizing profits, you know that the:

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In a monopolistically competitive market, if firms are producing at the quantity that minimizes average total cost, it indicates that they are not maximizing profits, as they typically operate with excess capacity. This situation suggests that there is room for more firms to enter the market, leading to an increase in the number of delis.

Toby Operates a Small Deli Downtown