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Unformatted text preview: -price equals average cost/no economic profit-price does not equal minimum average cost/no efficiency in production-price is great than marginal cost, no efficiency in resource allocation underallocation of resources- resources are used for advertising, which represents a waste from society's perspective of use of resources Positive attributes of monopolistic competition:-free entry leads to adaptability-product differentiation contributes to variety and choice to consumers-product differentiation leads to quality improvement Sheet1 Page 2 other firms will enter market, causing a...
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