At long-run equilibrium in monopolistic competition, there is
A) allocative efficiency but not productive efficiency.
B) productive efficiency but not allocative efficiency.
C) both allocative and productive efficiency.
D) neither allocative nor productive efficiency.

Question

Quizplus · Accepted Answer

In the long-run equilibrium of monopolistic competition, firms do not achieve allocative efficiency because price exceeds marginal cost, and they do not achieve productive efficiency because they do not produce at the minimum of their average total cost curve.

At Long-Run Equilibrium in Monopolistic Competition, There Is