In the long run, a monopolistically competitive firm and a perfectly competitive firm both produce at minimum average cost.

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In the long run, a monopolistically competitive firm produces at a point where average cost is not at its minimum due to product differentiation and brand loyalty, whereas a perfectly competitive firm produces at the minimum average cost due to the absence of barriers to entry and the presence of many firms producing homogeneous products.

In the Long Run, a Monopolistically Competitive Firm and a Perfectly