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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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