One way to view the cost structure of monopolistic competition is to say that the cost of product differentiation is equal to

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Monopolistically competitive firms incur costs to differentiate their products from their competitors, which can include marketing, advertising, packaging, and other expenses. These costs are reflected in a higher average total cost than if the firm were producing a standardized product in a perfectly competitive market. The cost of product differentiation is therefore the difference between the cost of production for a monopolistically competitive firm and the minimum average total cost.

One Way to View the Cost Structure of Monopolistic Competition