In monopolistic competition, the long-run equilibrium of a firm is characterised by:
A. Full capacity utilisation and supernormal profit
B. Excess capacity and normal profit
C. Excess capacity and supernormal profit
D. Full capacity utilisation and normal profit
Answer: Option B
Solution (By JKSSB Mock Tests)
Under monopolistic competition, firms produce less than the optimum output (excess capacity) and earn only normal profits in the long run due to free entry and exit.
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