Discuss the concept of excess capacity associated with the long run equilibrium under Monopolistic competition

Excess capacity is a key concept associated with the long-run equilibrium under monopolistic competition, a market structure characterized by a large number of firms producing differentiated products and having some degree of market power. In monopolistic competition, each firm faces a downward-sloping demand curve for its product due to product differentiation, and firms can enter or exit the market freely in the long run.

Excess capacity refers to a situation where a firm's level of production falls short of the level that would minimize its average cost of production. In other words, the firm is not producing at the point of minimum average cost, even though it ___ ____ _________ _______ ____.
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