Excess Capacity Is Defined as the Difference Between a Firm's

question 206

True/False

Excess capacity is defined as the difference between a firm's maximum possible output and its actual output.

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Definitions:

MCC Schedule

Marginal cost of capital schedule. A plot of the WACC (weighted average cost of capital) against the total amount of capital to be raised in a planning period. The MCC rises as more capital is raised and the costs of individual components experience step function increases.

Capital Spending

Refers to funds spent by a business or government on acquiring or maintaining physical assets such as property, plants, and equipment.

MCC

Marginal Cost of Capital; the cost of obtaining an additional dollar of new capital.

Marginal Cost of Capital

The cost of obtaining one additional dollar of new capital, which reflects the cost of the last unit of capital raised.