If a Firm Has Excess Capacity, Then

question 119

Multiple Choice

If a firm has excess capacity, then

• A)the firm expends too much of its resources on advertising its product without seeing an appreciable increase in sales.
• B)the firm is not producing its minimum efficient scale of output.
• C)the firm's long-run average cost of producing a given quantity exceeds its short-run cost of producing that same quantity.
• D)the firm's quantity supplied exceeds its quantity demanded.

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Definitions:

Spurious Relationships

Apparent associations between two variables that are not causally related but may be due to a third, unaccounted-for variable.

Internal Validity

Relates to experimental design. A study has internal validity when a cause-and-effect relationship between variables is clearly demonstrable and observed changes can be attributed to a defined causal variable and not to any other possible variables.

Attrition

The loss of participants from a study.

Treatment Effect

The impact of an intervention or treatment in experimental research, measured by the difference in outcomes between treated and control groups.