The long-run equilibrium for a monopolistically competitive firm is efficient because its produces where MR = MC.

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Allison Frias · Accepted Answer

Final Answer : False, Explanation :  In a monopolistically competitive market, firms face downward-sloping demand curves and have some market power, which allows them to charge a price higher than marginal cost. In long-run equilibrium, firms produce where marginal revenue equals marginal cost (MR = MC), but due to product differentiation and market power, the price is above marginal cost, leading to allocative inefficiency. Efficiency in the economic sense requires that P = MC, which is not achieved in monopolistic competition.

The long-run equilibrium for a monopolistically competitive firm is efficient because its produces where MR = MC.

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