Answer
A monopolistic competitor produces less output than what is efficient.
Because there are so many monopolistically competitive markets, regulating all of the products would be administratively difficult. Also, since these firms are already making 0 economic in the long run already, making them increase quantity & thus lowering prices would cause them to make losses.
Work Step by Step
Monopolistically competitive firms produce where marginal revenue meets marginal cost, but the efficient quantity is where demand meets marginal cost.
