Refer to Figure 26.2 for a monopolistically competitive firm.At the profit-maximizing output and price, this firm is producing at an output level that achieves

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At the profit-maximizing output and price, the monopolistically competitive firm is producing where MC = MR, which is not necessarily where P = MC (allocative efficiency) or where minimum average total cost (ATC) is achieved (productive efficiency). Therefore, the firm is not achieving productive or allocative efficiency.