a. P> MC is characteristic of a monopolistically competitive firm in both the short-run and the long run.
Monopolistic competition is a sort of market structure in which numerous businesses are present in a given sector and make comparable but distinctive goods.
None of the businesses has a monopoly, and they all run their own businesses without taking into account what other businesses are doing. The way the market is set up results in a type of unfair competition.
Companies engaged in monopolistic competition generate economic profits in the short term, but not over the long term. The latter is a product of the industry's open entry and departure policies as well.
Short-term economic gains encourage more entrants, which eventually results in increased competition, decreased costs, and high output.
In the short term, such a scenario inevitably eliminates economic profit and eventually results in economic losses. Continued economic losses provide people the choice to leave, which raises prices and profits and eliminates economic losses.
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