Excess capacity and high advertising expenditures are encountered in

Name: Excess capacity and high advertising expenditures are encountered in
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Question

Quizplus · Accepted Answer

Excess capacity and high advertising expenditures are characteristics of monopolistic competition, where firms have some power to differentiate their products and thus engage in advertising to attract customers. Unlike in perfect competition, firms in monopolistic competition face a downward-sloping demand curve, leading to excess capacity.

Excess Capacity and High Advertising Expenditures Are Encountered in