Economics · Market Structures

Which of the following statements is FALSE regarding the long-run equilibrium in monopolistic competition?

Verified Solution4 OptionsUpdated: October 2026👁️1 View

1The long-run equilibrium output is at the minimum point of the average total cost curve, ensuring productive efficiency.✓
2Firms operate with excess capacity in the long run.
3Firms produce at a point where price exceeds marginal cost, leading to allocative inefficiency.
4Firms produce at a level where marginal revenue equals marginal cost.

Correct answer

The long-run equilibrium output is at the minimum point of the average total cost curve, ensuring productive efficiency.

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