Excess Capacity Is a Characteristic of Monopolistically Competitive Firms

question 242

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-maximising 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.

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