With regard to cyclical and structural excess capacity:
A)They are basically the same thing
B)The latter signifies a long term imbalance in the industry
C)The former may be unavoidable in some industries
D)Both b and c above

Question

Quizplus · Accepted Answer

Cyclical excess capacity refers to the temporary surplus of goods or services that occurs during periods of economic downturns or recessions, when demand decreases. This excess capacity is generally considered to be unavoidable in some industries, such as the automobile industry, where production cannot be easily scaled back in response to short-term fluctuations in demand. 
On the other hand, structural excess capacity refers to a long-term imbalance in the industry, where supply continually exceeds demand even during periods of economic growth. This excess capacity can be the result of several factors, such as overinvestment, new market entrants, or technological advancements. Structural excess capacity is considered to be a more serious issue than cyclical excess capacity, as it can lead to lower prices, reduced profitability, and ultimately, market consolidation. Therefore, both options B and C are correct, and the best answer is D.

With Regard to Cyclical and Structural Excess Capacity