Argyle took the lead through Maksym Talovierov before City fought back to win 3-1.
Muslic said afterwards: "I think we gave a game to Man City. We made it difficult. Structure defensively was there. City are one of the best teams in the world coached by the best coach in the world. We can be disappointed with the result but proud of the performance.
"We deserved the lead because we were disciplined and we used our chance at the corner. Unluckily we conceded with the last action of the first half but that's how it is and we tried everything until the end."
On fight to stay in Championship, he added: "This will give us a confidence boost, I've only been here eight or nine weeks and my first message to the team was that it should be hard to play against us, it should be annoying and difficult. We have proved this tonight so these are steps we can take."