Since under monopolistic competition, P>MC in equilibrium, there is _________.

optimal allocation of resources

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nonoptimal allocation of resources

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greater allocation of resources

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lesser allocation of resources

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Solution

The correct option is B nonoptimal allocation of resources
Under monopolistic competition, if Price is more than Marginal cost there is no optimal utilisation of resources. Optimum utilisation of resources will be achieved only when price = marginal cost.

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