A firm has excess capacity if

Name: A firm has excess capacity if
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Excess capacity occurs when a firm produces below its efficient scale, meaning it is not utilizing all of its available resources to produce at the lowest possible cost. If a firm is producing above its efficient scale, it is operating at maximum capacity and cannot increase production without incurring higher costs. Selling factors of production or improving their quality do not necessarily indicate excess capacity.

A Firm Has Excess Capacity If