The most likely effect of regulators requiring firms in monopolistically competitive markets to set price equal to marginal cost is that:

Question

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In monopolistically competitive markets, firms typically set prices above marginal cost to cover average total costs and earn a normal profit. If regulators require these firms to set price equal to marginal cost, many would not cover their average total costs, leading to economic losses.

The Most Likely Effect of Regulators Requiring Firms in Monopolistically