What Does It Mean If a Firm Has Excess Capacity

question 122

Multiple Choice

What does it mean if a firm has excess capacity?

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

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Definitions:

Actual Demand

The real observed demand for a product or service, as opposed to forecasted or estimated demand.

Alpha

In finance, a measure of the active return on an investment compared to a market index; in other contexts, it can signify a beginning or a primary factor.

Recent Periods

Refers to the latest or most current time frames for which data or observations are available.

Moving Averages

A forecasting method that uses an average of the n most recent periods of data to forecast the next period.