The excess capacity in monopolistic competition may be viewed as:

A) the cost of product diversity.
B) efficient.
C) the reason P = MR = MC in monopolistic competition.
D) the advantage of monopolistic competition over monopoly.

Excess Capacity

A situation where a firm is producing at a lower scale of output than it has been built to handle, due to insufficient demand.

Product Diversity

The variety of different items within a particular category available to consumers in the market.

Monopolistic Competition

A market structure characterized by many firms offering products that are similar but not identical, allowing for slight differentiation among them.