Answer:
The correct answer is Excess Capacity.
Step-by-step explanation:
A monopolistically competitive firm is one that produces and or offers products or services in a market with similar, but not exact or perfect substitutes. A real-world example of a monopolistic competitive firm is Burger King. It competes with McDonald. Both companies sell burger and other types of fast food. However, are not perfect substitutes as there are slight differences, especially in shape and in taste, in the foods they offer.
When there is a gap between the quantity produced and the scale of output that a business or firm has been designed for, Excess Capacity is said to exist. In other words, the actual quantity produced is below what is optimal for the economy.
Cheers!