A Firm's Capacity Is Defined as the Level of Output

question 14

Multiple Choice

A firm's capacity is defined as the level of output where

• A)the upper limit on what can be produced is reached.
• B)average total cost is at its maximum.
• C)marginal cost equals average variable cost.
• D)average fixed costs are at a minimum.
• E)short-run average total cost is at its minimum.

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Definitions:

Sellers

Persons or organizations that provide products or services to be purchased in the marketplace.

Price Ceiling

A maximum price sellers are allowed to charge for a good or service; a form of price control.

Excise Tax

is a tax applied to specific goods or services, such as alcohol or tobacco, usually with the aim of reducing consumption or raising revenue.

SUVs

Sport Utility Vehicles, a category of motor vehicles which combine elements of road-going passenger cars with features from off-road vehicles.