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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