If there is excess capacity in a production facility, it is likely that the firm's supply curve is
A) price inelastic.
B) perfectly inelastic
C) unit price elastic.
D) price elastic.

Question

Quizplus · Accepted Answer

If there is excess capacity in a production facility, it means that the firm is not operating at full capacity and can increase its output without a significant increase in costs. This indicates that the firm's supply curve is likely price elastic, as it can increase its output significantly in response to a small increase in price. Thus, the best choice is D, price elastic.

If There Is Excess Capacity in a Production Facility, It