Final answer:A monopolistically competitive firm attracts competition when it has positive economic profits. This competition shifts the demand and marginal revenue curves leftward, leading to a new optimal price and output. Such a firm is not productively efficient or allocatively efficient.Explanation:Themonopolistically competitivefirm described in the question is one that operates in a market structure that is a hybrid between perfect competition and monopoly. Unlike a monopoly, this firm with positive economic profits attracts competition. As competition enters, the original firm's perceived demand curve shifts to the left, from Dº to D₁, and the marginal revenue curve also shifts from MR to MR₁.The new profit-maximizing output becomes Q₁, where the intersection of the MR₁ and MC occurs at point U. From that quantity on the new demand curve, theoptimal priceis found at P₁. Thus, a monopolistically competitive firm is neither productively efficient nor allocatively efficient as it does not produce at its minimum average cost or where P=MC.Learn more about Monopolistically Competitive Firm here:brainly.com/question/32099344#SPJ11...

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