Monopolistic competition leads to overutilization of plants.

Name: Monopolistic competition leads to overutilization of plants.
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Question

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In monopolistic competition, firms often operate under capacity, leading to underutilization of plants, not overutilization. This is because each firm has some market power and faces a downward-sloping demand curve, leading them to produce less than the output level that would maximize plant utilization.

Monopolistic Competition Leads to Overutilization of Plants