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:

Competitive Environment

The dynamic external system in which businesses compete for resources, customers, and market space.

Pure Competition

The market structure that exists when there are many small businesses selling one standardized product.