Refer to Figure 13-19 to answer the following questions
a. What is the productively efficient output?
b. What is the allocatively efficient output?
c. What is the amount of excess capacity?
d. Suppose the firm is currently producing 14 units. What happens if it increases output to 17 units?
a. The productively efficient output is 20 units.
b. The allocatively efficient output is 19 units.
c. The amount of excess capacity is 6 units.
d. If the firm increases output to 17 units, it will go from zero profit to a loss.
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