Asked by Christian Broussard on May 30, 2024
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When the profit-maximizing level of output is less than the output associated with the minimum possible average total cost of production,a firm is said to have:
A) economic profits.
B) excess capacity.
C) advertising.
D) excess production.
Profit-Maximizing Level
the output quantity at which a firm achieves the highest possible profit, where marginal revenue equals marginal cost.
Excess Capacity
A situation where a firm is producing at a lower level of output than it has the potential to due to insufficient demand.
Average Total Cost
The total cost of production divided by the number of units produced, representing the per unit cost of production.
- Comprehend the principles of surplus capacity and financial gains within various market configurations.
- Understand the causes and effects of surplus capacity in a market characterized by monopolistic competition.
Verified Answer
Learning Objectives
- Comprehend the principles of surplus capacity and financial gains within various market configurations.
- Understand the causes and effects of surplus capacity in a market characterized by monopolistic competition.
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