In the long run,firms in a monopolistically competitive market operate:

Question

Quizplus · Accepted Answer

In monopolistically competitive markets, firms usually have excess capacity and operate at less than capacity in the long run. This is because they have some market power to set prices above marginal costs, but they also face competition from other firms offering similar but differentiated products. Firms would only operate at capacity if they were in a perfectly competitive market, which is not the case for monopolistically competitive markets.

In the Long Run,firms in a Monopolistically Competitive Market Operate