When firms in a monopolistically competitive market are said to experience excess capacity, this fact is:

Question

Quizplus · Accepted Answer

Excess capacity in monopolistic competition means firms do not produce at the lowest point on their average cost curve, leading to inefficiencies. However, this is not directly relevant to evaluating economic welfare, which considers broader factors like consumer choice and product diversity.

When Firms in a Monopolistically Competitive Market Are Said to Experience