Exhibit 24-6

Refer to Exhibit 24-6. Excess capacity refers to the distance between

Question

Exhibit 24-6

Refer to Exhibit 24-6. Excess capacity refers to the distance between

Quizplus · Accepted Answer

Excess capacity refers to the difference in quantity between the optimal level of output and the actual level of output. In this exhibit, the optimal level of output is represented by the point Q₂ where marginal cost intersects with marginal revenue. The actual level of output is represented by Q₁. Therefore, the excess capacity is the distance between Q₂ and Q₁.

Exhibit 24-6 Refer to Exhibit 24-6. Excess Capacity Refers to the Distance