Excess capacity implies
A) productive inefficiency.
B) allocative inefficiency.
C) productive efficiency.
D) allocative efficiency.

Name: Excess capacity implies A) productive inefficiency. B) allocative inefficiency. C) productive efficiency. D) allocative efficiency.
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Question

Quizplus · Accepted Answer

Excess capacity means that a firm's output level is below its capacity level. It indicates that the firm is not utilizing its resources efficiently, which is a type of productive inefficiency. Therefore, the correct answer is A.

Excess Capacity Implies