In the long run, a monopolistically competitive firm produces at minimum average cost.

Name: In the long run, a monopolistically competitive firm produces at minimum average cost.
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Question

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A monopolistically competitive firm produces at a point where marginal revenue equals marginal cost, which is not necessarily at the minimum point of the average cost curve. Therefore, the firm may produce at a level of output where it has an excess capacity and operates at a higher average cost than the minimum point.

In the Long Run, a Monopolistically Competitive Firm Produces at Minimum