In monopolistic competition, if a firm's price is below its average total cost, it is experiencing __________ economic profit, indicating potential inefficiency and losses.

In monopolistic competition, if a firm's price is below its average total cost, it is experiencing a loss. This means that the money the firm makes from selling its products is not enough to cover all its costs, including both fixed costs and variable costs. For example, if a coffee shop sells its drinks for $3 but it costs $4 to make each drink when considering rent, ingredients, and labor, the shop loses $1 on each drink sold. This situation indicates inefficiency because the firm is not able to operate profitably. If this continues, the firm may need to rethink its prices or reduce costs to avoid further losses.