If regulators required firms in monopolistically competitive markets to set price equal to marginal cost:

Question

Quizplus · Accepted Answer

In monopolistically competitive markets, firms have some market power and can charge a price above marginal cost. If regulators required firms to set price equal to marginal cost, many firms would experience decreased profits or even losses. This would make it difficult for them to stay in business, and some may require a subsidy to continue operating.

If Regulators Required Firms in Monopolistically Competitive Markets to Set