4. Is monopolistic competition efficient? Suppose that a company operates in the monopolistically competitive market for rugby kits. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. 100 90 Mon Comp Outcome so Min Unit Cost 8 8 PRICE (Dollars per kit) ATC MR Demand 10 20 30 40 50 60 80 90 100 QUANTITY (Thousands of kits) Because this market is monopolistically competitive, you can tell that it is in long-run equilibrium by the fact that at the optimal quantity for each firm. Further, a monopolistically competitive firm's average total cost in long-run equilibrium is the minimum average total cost True or False: This indicates that there is excess capacity in the market for kits. True O False Monopolistically competitive markets may be socially inefficient due to the presence of too many or too few firms. The presence of the V externality implies that there is too little entry of new firms in the market