In the short run, a firm in a monopolistically competitive market operates much like a monopolist.

Question

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In the short run, a firm in a monopolistically competitive market can behave like a monopolist by setting a price higher than marginal cost, since it has some degree of market power. However, unlike a monopolist, it faces competition from other firms in the long run, which puts pressure on it to lower its price and reduce its market power.

In the Short Run, a Firm in a Monopolistically Competitive