Refer to Figure 26.3 for a monopolistically competitive firm in the long run. Which of the following observations results in the problem of excess capacity? A) The firm is producing less than the minimum-ATC output rate. B) The firm is producing at Q₃ instead of where MR = MC. C) The firm is earning only zero economic profits in the long run. D) The firm is producing at Q₁ instead of where MC = demand.

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The Answer of Refer to Figure 26.3 for a monopolistically competitive firm in the long run. Which of the following observations results in the problem of excess capacity? A) The firm is producing less than the minimum-ATC output rate. B) The firm is producing at Q₃ instead of where MR = MC. C) The firm is earning only zero economic profits in the long run. D) The firm is producing at Q₁ instead of where MC = demand.