Monopolistically competitive firms are unlikely to (d) operate where price equals marginal cost.
Between a monopoly and perfect competition, monopolistically competitive firms exist, combine aspects of both, and comprise businesses with comparable but distinct product offerings. Industries that come under the category of monopolistically competitive firms include those in restaurants, hair salons, household goods, and clothes. There are numerous rival businesses that sell, market, and charge for goods like dish soap or hamburgers. In a market structure known as a monopolistically competitive firm, several businesses compete for market share while providing goods that are similar to yet different from those of the other businesses. Consider the characteristics, advantages, and disadvantages of a monopolistically competitive firm.
The complete question is:
Monopolistically competitive firms are unlikely to:
A. produce where price equals average total cost.
B. charge a higher price than firms in perfect competition.
C. produce a smaller quantity than firms in perfect competition.
D. operate where price equals marginal cost.
E. exit the industry when demand falls below long-run average costs.
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