Final answer:
The statement is false; monopolistically competitive firms do not produce at the efficient scale and instead have excess capacity, operating where price is greater than marginal cost.
Step-by-step explanation:
The statement is B. False. In the long run, a monopolistically competitive firm does not produce at the efficient scale. Unlike a perfectly competitive firm, which operates at the lowest point of its average cost curve indicating productive efficiency, a monopolistically competitive firm operates where price is greater than marginal cost (P > MC), indicating that it has excess capacity.
This is because in monopolistic competition, firms have some market power due to product differentiation, which allows them to charge a higher price than marginal cost, leading to a lower quantity produced compared to the socially optimal output in a perfectly competitive market.