A Firm Has Excess Capacity If Its Output Is

question 131

Multiple Choice

A firm has excess capacity if its output is

• A) less than the quantity at which average total cost is minimised.
• B) less than the quantity at which marginal cost is minimised.
• C) more than the quantity at which average total cost is minimised.
• D) less than the quantity at which economic profit is maximised.

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Definitions:

Buy Shares

The act of purchasing ownership interests in a company, thereby becoming a shareholder entitled to dividends and capital gains.

Lower Bound

The minimum value that a theoretical price, such as an option's price, can reach.

Call Option

A contractual agreement that allows the buyer the choice, without any requirement, to purchase an asset at an agreed-upon price within a set period.

Stock Price

The current trading price of a company's shares on the stock market, reflecting the market's valuation of the company at a particular time.