What is meant by the term "economic capacity"?
A)The output level at which the firm is physically unable to increase output.
B)The output level at which average variable cost is at a minimum.
C)The output level at which average total cost is at a minimum.
D)The output level at which marginal cost is at a minimum.

Question

Quizplus · Accepted Answer

Economic capacity refers to the level of output at which average total cost is at a minimum. This is because at this level of output, the firm is producing at maximum efficiency and is able to minimize its costs. Therefore, option C is the correct choice. Options A, B, and D refer to other cost-related concepts but not specifically economic capacity.

What Is Meant by the Term "Economic Capacity