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At long run equilibrium, according to the excess-capacity theorem, monopolistically competitive firms produce on the falling portion of their long-run average cost curves. Therefore they
At long run equilibrium, according to the excess-capacity theorem, monopolistically
competitive firms produce on the falling portion of their long-run average cost curves.
Therefore they do not operate at minimum average total cost. What non-price consideration
can offset the higher costs and benefit consumers in monopolistically competitive markets?
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