A monopolistic competitive firm produces at the lowest point on its average total cost curve.

Question

Quizplus · Accepted Answer

A monopolistically competitive firm typically does not produce at the lowest point on its average total cost curve due to the fact that it has some degree of market power which allows it to set prices above marginal cost, leading to production levels that do not coincide with the most efficient scale of operation.

A Monopolistic Competitive Firm Produces at the Lowest Point on Its