If regulators required firms in monopolistically competitive markets to set price equal to marginal cost,
A)firms would most likely experience economic losses.
B)firms would also operate at their efficient scale.
C)new firms would likely to enter the market.
D)the most efficient firms would not likely to be affected.

Question

Quizplus · Accepted Answer

In monopolistic competition, firms typically set prices above marginal cost to cover average total costs and earn normal profits. If forced to set price equal to marginal cost, they would not cover average total costs, leading to economic losses.

If Regulators Required Firms in Monopolistically Competitive Markets to Set