Excess capacity and high advertising expenditures are encountered in

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Excess capacity and high advertising expenditures are commonly encountered in monopolistic competition. In this type of market structure, firms differentiate their products to create a perception of uniqueness, resulting in excess capacity and high advertising expenditures to differentiate their products from competitors. Perfect competition is characterized by a large number of firms producing homogenous goods or services, resulting in no excess capacity or advertising expenditures. Monopoly, on the other hand, is characterized by a single firm in the market, leading to no excess capacity and low advertising expenditures. Non-profit competition is not a recognized market structure.

Excess Capacity and High Advertising Expenditures Are Encountered in