Under perfect competition,the demand curve facing the firm is horizontal,so the zero-profit point occurs at the point of minimum average cost. Under monopolistic competition the demand curve is downward sloping,so the zero-profit point is to the left of the point of minimum average cost. In evaluating monopolistic competition,these inefficiencies must be balanced (against the gains to consumers from product diversity.Under perfect competition, the demand curve facing the firm is horizontal, so the zero-profit point occurs at the point of minimum average cost. Under monopolistic competition the demand curve is downward sloping, so the zero-profit point is to the left of the point of minimum average cost. In evaluating monopolistic competition, these inefficiencies must be balanced (抵消) against the gains to consumers from product diversity