The economic inefficiencies of monopolistic competition may be offset by the fact that

A) advertising expenditures shift the average cost curve upward.
B) available capacity is fully utilized.
C) resources are optimally allocated to the production of the product.
D) consumers have increased product variety.

Monopolistic competition often leads to economic inefficiencies such as higher prices and less output compared to perfect competition. However, one of the benefits of monopolistic competition is that it encourages product differentiation, leading to increased product variety for consumers. This variety can enhance consumer satisfaction by offering more choices to match diverse preferences, which can be seen as offsetting some of the inefficiencies associated with monopolistic competition.