It is the case in both perfectly competitive and monopolistically competitive markets that other firms will enter when firms are making positive economic profits, until price eventually equals ATC and economic profits are zero. Despite these similarities, in a perfectly competitive market total surplus is maximized, while in a monopolistically competitive market surplus is not maximized. Which of the following statements explains this difference? a. In monopolistically competitive markets, firms face horizontal demand curves while in perfectly competitive markets firms face downward-sloping ones.
b. In perfectly competitive markets, firms operate where MR is equal to MC, which is where ATC is minimized.
c. In monopolistically competitive markets, firms operate of the ATC curve which means that MC is higher than ATC.
d. In monopolistically competitive markets, firms operate where ATC is equal to MC which is where ATC is minimized.