A firm's efficient scale is the quantity at which ________ is a minimum.
A firm has excess capacity if it produces ________ its efficient scale.
In the long run,a firm in monopolistic competition produces less than the efficient scale and has excess capacity because the firm faces a ________ demand curve.

Question

Quizplus · Accepted Answer

The efficient scale is the quantity at which average total cost is minimized. A firm has excess capacity if it produces below its efficient scale. In monopolistic competition, firms face a downward-sloping demand curve, leading to production below efficient scale and excess capacity.

A Firm's Efficient Scale Is the Quantity at Which ________