Which of the Following Would Measure Excess Capacity

question 107

Multiple Choice

Which of the following would measure excess capacity?

• A)The difference between what is being produced and the level of production that maximizes profits.
• B)The difference between what is being produced and economic capacity.
• C)The difference between what is being produced and the level of production that minimizes short-run marginal cost.
• D)The difference between the level of production that minimizes short-run average cost and that achieves economic capacity.

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Definitions:

Labor

The physical and mental effort used in the production of goods and services by workers.

Equilibrium Price

The price at which the quantity of a good demanded by consumers equals the quantity of that good supplied by producers, achieving a state of market balance.

Marginal Cost

The additional cost incurred to produce one more unit of a good or service.

Marijuana

A psychoactive drug from the Cannabis plant, used for medical or recreational purposes.