A firm in monopolistic competition maximizes profit by producing the quantity at which

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In monopolistic competition, the firm will not produce at a point where price equals marginal cost or average total cost since they have some degree of market power to set a price higher than their costs. The profit-maximizing level of output occurs where marginal revenue equals marginal cost, which is the same as in a perfectly competitive market.

A Firm in Monopolistic Competition Maximizes Profit by Producing the Quantity