"Excess capacity" exists in monopolistic competition but not in pure competition.

Name: "Excess capacity" exists in monopolistic competition but not in pure competition.
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Question

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In monopolistic competition, firms have excess capacity because they do not produce at the minimum point of their average total cost curve, unlike in pure competition where firms produce where price equals the minimum of average total cost, leading to no excess capacity.

"Excess Capacity" Exists in Monopolistic Competition but Not in Pure