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      Question

      Under which market condition do firms have excess

      capacity?
      A Perfect competition Correct Answer Incorrect Answer
      B Monopolistic competition Correct Answer Incorrect Answer
      C Duopolistic Competition Correct Answer Incorrect Answer
      D Both A & B Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      Monopolistic competition exists when many companies offer competing products or services that are similar, but not perfect, substitutes.

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