A firm's capacity is defined as the level of output where
A)average total cost is at its maximum.
B)short- run average total cost is at its minimum.
C)the upper limit on what can be produced is reached.
D)average fixed costs are at a minimum.
E)marginal cost equals average variable cost.

Question

Quizplus · Accepted Answer

A firm's capacity is defined as the level of output where the short-run average total cost is at its minimum, indicating the most efficient scale of production.

A Firm's Capacity Is Defined as the Level of Output