Under What Circumstances Does a Firm Operate with Excess Capacity

question 151

Multiple Choice

Under what circumstances does a firm operate with excess capacity

• A)when additional production would lower the average total cost
• B)when additional production would increase average total cost
• C)only if it is a perfectly competitive firm in the long run
• D)only if it is a monopolistically competitive firm in the short run

---

Definitions:

Objects

Physical items that occupy space and can be perceived by one or more senses; can also refer to goals or targets in various contexts.

Formal Operational Stage

The last stage in Piaget's theory of cognitive development, characterized by the ability to think logically about abstract concepts.

Abstract Thinking

The ability to think about objects, principles, and ideas that are not physically present.

Logical Thinking

The process of using systematic reasoning to reach a conclusion or solve problems.