What is happening when a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost

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When a profit-maximizing firm in a monopolistically competitive market charges a price higher than marginal cost, it is enjoying a markup over marginal cost. This is because the firm has some degree of market power, allowing it to set a price above its marginal cost of production. The size of the markup will depend on the extent of competition in the market, the firm's elasticity of demand, and other factors. However, in a perfectly competitive market, firms are forced to charge a price equal to their marginal cost, as any attempt to charge a higher price will result in lost sales to competitors.

What Is Happening When a Profit-Maximizing Firm in a Monopolistically