Figure 16-14
-Refer to Figure 16-14. Which of the following represents the excess capacity of this firm?
A)BJ
B)GH
C)LM
D)There is no excess capacity.

Question

Figure 16-14 
-Refer to Figure 16-14. Which of the following represents the excess capacity of this firm?
A)BJ 
B)GH 
C)LM 
D)There is no excess capacity.

Quizplus · Accepted Answer

Excess capacity refers to the unused or unutilized capacity of a firm. In this figure, LM represents the unused capacity as it is the vertical distance between the firm's capacity (PQ) and output level (MN). Therefore, C) LM is the best choice as it represents the excess capacity of the firm.

Figure 16-14 -Refer to Figure 16-14. Which of the Following Represents the Following