Comparing Long-Run Equilibrium in Perfect Competition and Monopolistic CompetitionPanel (a) shows the situation of the typical firm in long-run equilibrium in a perfectly competitive industry. The firm operates at the minimum-cost output QPC, sells at the competitive market price PPC, and makes zero profit. It is indifferent to selling another unit of output because PPC is equal to its marginal cost, MCPC. Panel (b) shows the situation of the typical firm in long-run equilibrium in a monopolistically competitive industry. At QMC it makes zero profit because its price PMC just equals average total cost, ATCMC. At QMC the firm would like to sell another unit at price PMC since PMC exceeds marginal cost, MCMC. But it is unwilling to lower the price to make more sales. It therefore operates to the left of the minimum-cost output level and has excess capacity.