Firms in monopolistic competition and in perfect competition have excess capacity.True

Name: Firms in monopolistic competition and in perfect competition have excess capacity.True
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Question

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In perfect competition, firms produce at the minimum point of their average total cost curve, meaning they do not have excess capacity. However, firms in monopolistic competition do have excess capacity because they produce below the level of output that minimizes average total cost.

Firms in Monopolistic Competition and in Perfect Competition Have Excess