is a market structure in which there are many competing producers in an industry, each producers sells a differentiated product, and there is free entry into and exit from the industry in the long run.

(Figure 16-1)

  in the long run, a monopolistically competitive industry ends up in zero-profit equilibrium, each firm makes zero profit at its profit- max quantity.  (Figure 16-2 and 3)

Monopolistic Competition vs. Perfect Competition

Price, Marginal Cost and Average Total Cost (Figure 16-4)

  firms in  monopolistically competitive industry have excess capacity, they produce less than the output at which average total cost is minimized.