When Does Excess Capacity in an Industry Occur

question 83

Multiple Choice

When does excess capacity in an industry occur?

• A) when quantity supplied exceeds quantity demanded
• B) when quantity demanded exceeds quantity supplied
• C) when economic profits are negative
• D) when production occurs to the left of minimum average total cost

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Definitions:

Concave

A shape or curve that is curved inward, resembling the interior of a circle or sphere, often used to describe functions or geometric objects.

Convex

A shape or curve that curves outward or bulges outward, typically used in the context of geometric figures or in economic models to describe preferences or production possibilities.

Budget Lines

A visual depiction showing every possible pair of two products that can be bought within a specific budget at constant prices.

Indifference Curve Analysis

A graphical representation used in microeconomics to show combinations of two goods that provide the consumer with equal levels of satisfaction or utility.