Long-run equilibrium for a monopolistic competitor is characterized by

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A monopolistic competitor operates on a downward sloping demand curve and has some market power. In the long run, the firm adjusts its output and price until it achieves equilibrium where marginal revenue equals marginal cost. However, the price charged will be higher than the competitive price since the demand curve is downward sloping. Therefore, the monopolistic competitor will charge a price above marginal cost, resulting in economic profits in the short run. In the long run, firms may enter the market, increasing competition and reducing economic profits, but the price will still be above marginal cost.

Long-Run Equilibrium for a Monopolistic Competitor Is Characterized by