When a Firm Operates with Excess Capacity

question 51

Multiple Choice

When a firm operates with excess capacity,

• A)additional production would lower the average total cost.
• B)additional production would increase the average total cost.
• C)it must be a perfectly competitive firm.
• D)it must be a monopolistically competitive firm.

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Definitions:

Equipment and Facilities

The tools, machinery, and infrastructure required for the production of goods or the provision of services.

Legal Implications

Refers to the possible consequences or effects that actions or decisions might have under the law.

Admissions

The process or act of allowing someone to enter a place, institution, or organization, often based on certain criteria or requirements.

Guilt

A feeling of responsibility or remorse for some offense, crime, wrong, whether real or imagined.