Question
Under perfect competition, the industry does not have any excess capacity because each firm produces at the minimum point on its
Answer: Option C
Answer: (c)
Under perfect competition, the firms operate at the minimum point of the long-run average cost curve.
In this way, the actual long-run output of the firm under monopolistic competition falls short of what is produced under perfect competition which can be considered the socially ideal output. This gives the measure of excess capacity which lies unutilized under imperfect competition.
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Answer: (c)
Under perfect competition, the firms operate at the minimum point of the long-run average cost curve.
In this way, the actual long-run output of the firm under monopolistic competition falls short of what is produced under perfect competition which can be considered the socially ideal output. This gives the measure of excess capacity which lies unutilized under imperfect competition.
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