Excess capacity, along with zero long-run economic profits, is most likely to occur in what type of market structure?

Question

Quizplus · Accepted Answer

Monopolistic competition is characterized by many firms, differentiated products, and free entry and exit. In the long run, firms in a monopolistically competitive market operate at excess capacity and earn zero economic profits due to the downward-sloping demand curve for their differentiated product and the entry of new competitors.

Excess Capacity, Along with Zero Long-Run Economic Profits, Is Most