The difference between the output corresponding to minimum average total cost and the output produced by a monopolistically competitive firm in the long run is called excess capacity.

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Excess capacity refers to the situation where a firm produces at a level of output that is less than the output level corresponding to minimum average total cost. In monopolistic competition, firms often operate with excess capacity in the long run because they face downward-sloping demand curves and produce at a point where marginal cost equals marginal revenue, which does not coincide with the minimum average total cost point.

The Difference Between the Output Corresponding to Minimum Average Total