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Question-4 Monopolistically competitive firms compete only on price, earn excess economic profits in the LR and lead to wastage of scarce resources through excess capacity.
Question-4
Monopolistically competitive firms compete only on price, earn excess economic profits in the LR and lead to wastage of scarce resources through excess capacity. In addition, the business stealing effect imposes a large cost on society. Do you agree? Carefully analyse each part of this statement briefly.
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