A firm that would experience higher average total cost by increasing production is operating with excess capacity.

Name: A firm that would experience higher average total cost by increasing production is operating with excess capacity.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A firm experiencing higher average total cost by increasing production is operating beyond its most efficient scale, not with excess capacity. Excess capacity implies the firm can produce more at a lower average cost.

A Firm That Would Experience Higher Average Total Cost by Increasing