Monopolistic competition in an industry will result in _____ because firms produce _____.
A)overutilization of plants;the minimum-cost output
B)less advertising than in perfect competition;the minimum-cost output
C)lower prices than in perfect competition;more than the minimum-cost output
D)chronic excess capacity;less than the minimum-cost output

Question

Quizplus · Accepted Answer

Monopolistic competition leads to excess capacity because each firm produces a slightly differentiated product, which means they cannot capture the entire market demand. As a result, they operate at less than the minimum-cost output level and have excess capacity.

Monopolistic Competition in an Industry Will Result in _____ Because