In what way does the profit-maximizing behavior of monopolistically competitive firms lead to a failure in allocative efficiency?

• A. They produce at a point where marginal revenue equals marginal cost, not where marginal benefit equals marginal cost.
• B. They produce at a point where marginal cost equals marginal benefit.
• C. They produce at a point where average total cost is minimized.
• D. They produce at a point where price equals marginal cost.

Answer: (A)