In monopolistically competitive markets, resources are

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In monopolistically competitive markets, firms produce differentiated products that are close substitutes, leading to a downward-sloping demand curve. In the long run, firms can enter or exit the market, and profits or losses will push prices towards marginal cost. However, because products are differentiated, firms have some market power and can charge a markup, leading to a price above marginal cost. This means that long-run equilibrium occurs where price exceeds marginal cost, which leads to an underallocation of resources compared to perfect competition.

In Monopolistically Competitive Markets, Resources Are