Excess Capacity Is a Characteristic of Monopolistically Competitive Firms

question 131

Multiple Choice

Excess capacity is a characteristic of monopolistically competitive firms.What does excess capacity mean?

• A)It means that firms do not produce the output level that corresponds to the minimum point on their average total cost curves.
• B)It means that firms hire more than the minimum number of workers needed to produce the profit-maximizing level of output.
• C)It means that firms produce with inefficient combinations of resources.
• D)It means that firms build plants that are not large enough to achieve minimum efficient scale.

---

Definitions:

Linear Perspective

A technique in art and photography that creates the illusion of depth on a flat surface, using converging lines to depict objects more distant as smaller.

Aerial Perspective

A technique in art and photography that uses the way atmosphere affects human perception of distance to create a sense of depth.

Motion Parallax

Motion Parallax is an optical illusion where objects closer to the observer appear to move faster than objects further away when the observer moves their head or body side-to-side.

Perceptual Constancy

The perceptual phenomenon where the perception of objects remains relatively unchanged under different conditions such as changes in illumination, distance, or perspective.