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This lesson covers the monopolistic competition in the short and long run. In the short run the firm can earn both profits and losses. However, in the long run more firms will enter the market shifting the previous firms demand curve to the left. The ATC curve is now tangent to the demand curve and the firm will lose all the previous profits that they earned. The firm will now be making a normal profit, but is still considered inefficient because they aren't producing at the socially optimal level.
