The long-run equilibrium of a monopolistic competitor differs from the long-run equilibrium of a perfect competitor in that

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In the long-run equilibrium of a monopolistic competitor, the firm charges a price that exceeds marginal cost, whereas in the long-run equilibrium of a perfect competitor, the price is equal to marginal cost. The monopolistic competitor differentiates its product from competitors through branding, advertising, or quality, allowing it to charge a higher price. However, this also means that there is a reduced quantity of output and economic profits in the long-run equilibrium. The monopolistic competitor does not necessarily produce at the minimum point of its average total cost curve, as the price it charges allows it to operate with a degree of inefficiency.

The Long-Run Equilibrium of a Monopolistic Competitor Differs from the Long-Run