Excess Capacity Implies

question 82

Multiple Choice

Excess capacity implies

• A) productive inefficiency.
• B) allocative inefficiency.
• C) productive efficiency.
• D) allocative efficiency.

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Definitions:

Price

The amount of money required to purchase a good or service, determined by factors such as supply and demand.

Market Price

Market price is the current price at which a good or service can be bought or sold in a competitive marketplace.

Profit

The financial gain obtained when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Short Run

A period in which at least one factor of production is fixed, constraining the ability of a firm to adjust its output levels.