A monopolistically competitive market could be considered inefficient because

Question

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In a monopolistically competitive market, the price is set above the marginal cost of production, resulting in an inefficient allocation of resources. The firm has some market power to set the price higher than the efficient level, leading to a deadweight loss. This is unlike perfect competition where the price is equal to the marginal cost, resulting in an efficient allocation of resources.

A Monopolistically Competitive Market Could Be Considered Inefficient Because