If we were to compare the monopolistically competitive firm's long-run outcome to that of a perfectly competitive firm, we would conclude that the monopolistically competitive firm:

Question

Quizplus · Accepted Answer

In the long run, a monopolistically competitive firm faces downward-sloping demand and has some market power, which allows it to charge a price higher than marginal cost, leading to less consumer surplus compared to a perfectly competitive firm, which charges a price equal to marginal cost. Monopolistically competitive firms do not necessarily produce more output or earn the same profit as perfectly competitive firms in the long run.

If We Were to Compare the Monopolistically Competitive Firm's Long-Run