In what way is monopolistic competition less beneficial to the welfare of society in the long run?
A)The firm can earn an economic profit.
B)The firm does not produce where marginal revenue is equal to marginal cost.
C)The firm does not produce where average total cost is minimized
D)The firm does not shut down if the price is less than average variable cost.

Question

In what way is monopolistic competition less beneficial to the welfare of society in the long run? ​
A)​The firm can earn an economic profit.
B)​The firm does not produce where marginal revenue is equal to marginal cost.
C)​The firm does not produce where average total cost is minimized
D)​The firm does not shut down if the price is less than average variable cost. ​

Quizplus · Accepted Answer

In monopolistic competition, firms do not produce at the minimum point of the average total cost curve in the long run, leading to excess capacity and inefficiency, which is less beneficial to societal welfare.

In What Way Is Monopolistic Competition Less Beneficial to the Welfare