What is meant by "excess capacity"? How does it relate to consumer utility?
What will be an ideal response?
Excess capacity refers to a situation where a firm does not produce at the lowest possible average cost. In other words, economies of scale have not been exhausted. Excess capacity is an inevitable consequence of product differentiation. Firms differentiate their products in order to appeal to consumers' varied tastes. Consumers are, therefore, better off—they have greater utility—than they would be if companies did not differentiate their products. Consumers are willing to pay for the higher costs that result from product differentiation.
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A long term goal of the EU member countries is to integrate their economies into a single economic entity with a common currency as well as common trade policies and internal factor mobility
Indicate whether the statement is true or false
Identify the correct statement from the following
a. Wages offered for a particular type of job are the same across the country. b. The labor market exhibits rapid adjustment to changes in supply or demand conditions. c. The labor market usually yields a range of wages rather than a unique equilibrium. d. Wages exhibit frequent and prompt changes in response to changes in market conditions.
Which of the following is consistent with a competitive market?
A.) A small number of firms B.) Exit of small firms when profits are high for large firms C.) Zero economic profit in the long run D.) Marginal revenue lower than price for each firm
For Elliot's dog-walking service, the only variable input is labor. Elliot's labor costs are $300 a day and his service walks 30 dogs per day. To walk 31 dogs per day, his labor costs increase to $305 a day. The marginal cost of walking that 31st dog is
A) $5. B) $9.83. C) $19.52. D) indeterminate from the information given.