Monopolistic competitive firms do not produce at the minimum of their average cost curves.

Question

Quizplus · Accepted Answer

Monopolistic competitive firms do not produce at the minimum of their average cost curves because they have some degree of market power, meaning they can charge prices above marginal cost. This results in firms producing at a level of output below the minimum efficient scale and with average costs higher than the minimum point on the average cost curve.

Monopolistic Competitive Firms Do Not Produce at the Minimum of Their