Define the efficient scale of production. For the situation of a firm in monopolistic competition, discuss its excess capacity
What will be an ideal response?
The efficient scale is the quantity produced when average total cost is at its minimum. In the long run, a firm in monopolistic competition operates below the efficient scale when maximizing profits. The difference between the efficient scale and the quantity produced by a firm is the excess capacity. Because the firm is not producing at the efficient scale, its average total cost is higher than if it produced at the efficient scale.
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Which of the following is true about the United States?
A. There has only been one recession in U.S. history. B. There have been recessions every couple of years throughout U.S. history. C. Recessions have never occurred in the United States. D. Recessions have occurred periodically in U.S. history. E. Recessions in the United States have generally been worse than in other countries.
The trade deficits of the 1980s and 1990s reflect American desire for foreign
A. assets and foreign desire for American goods and services. B. goods and services and foreign assets. C. goods and services and foreign desire for American assets. D. assets now and foreign goods and services in the future.
Which of the following statements is true?
A) Bad weather isn't always that bad for farmers' incomes. B) An individual farmer would probably increase his revenues if he experienced good weather and other farmers experienced bad weather. C) Price elasticity of demand is a relevant factor to a farmer's income. D) a and b E) a, b, and c
A movement up the aggregate supply curve is caused by a(n)
A. decrease in the price level. B. increase in aggregate supply. C. increase in the price level. D. decrease in aggregate supply.