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Why do monopolistic firms exhibit excess capacity?
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Why do monopolistic firms exhibit excess capacity?

User Vishrant
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23 votes

Answer:

Excess capacity under monopolistic competition is caused by product differentiation that leads to product variety and quality, which is beneficial to consumers. Consumers generally do not prefer homogenous products. Technically, excess capacity increases consumer satisfaction.

Step-by-step explanation:

(hope this helps)

User Anderson Contreira
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