Final answer:
A monopolistically competitive firm does not achieve resource-allocative efficiency because it does not produce at the minimum of its average cost curve and sets prices above marginal cost, unlike a perfectly competitive firm which does both and thus achieves both productive and allocative efficiency.
Step-by-step explanation:
The key difference between a perfectly competitive firm and a monopolistically competitive firm lies in their efficiency levels. A perfectly competitive firm achieves resource-allocative efficiency by producing where price (P) equals marginal cost (MC), leading to the optimal distribution of resources where consumer demand is satisfied at the lowest price. In contrast, a monopolistically competitive firm doesn't produce at minimum average cost, nor does it produce where P equals MC, but rather where P exceeds MC. This results in less than optimal resource allocation, higher production costs, and higher prices charged to consumers.
In essence, a monopolistically competitive firm fails to achieve both productive and allocative efficiency. This is because these firms have some degree of market power, which allows them to set prices above their marginal costs, unlike in perfect competition where firms are price takers. The outcomes are a lower quantity of goods produced, higher costs, and higher prices compared to perfectly competitive markets. This is a fundamental characteristic of monopolistic competition, where firms have some control over the price due to product differentiation but still face competition from other firms offering similar products.