5.Fill in the blanks in the following sentence. In a monopolistically competitive market in the long run, marginal cost is __________ average cost, and marginal revenue is __________ marginal cost.
b.greater than, equal to Incorrect. It is true that marginal revenue equals marginal cost, but marginal cost is not greater than average cost. Firms in monopolistically competitive markets are able to charge a price above marginal cost because of product differentiation. Over the long run, price will equal average cost because above-normal profits will attract entry of other firms. What does this imply about the relationship between marginal cost and average cost?
