Asked by
Julia szynal
on Dec 05, 2024
Verified
The restaurant industry is characterized by excess capacity.This means that:
A) restaurants are producing more than their profit-maximizing level.
B) the profit-maximizing level is less than the level that minimizes average total costs.
C) restaurants are producing less than their profit-maximizing level.
D) the quantity of restaurant meals supplied exceeds the quantity of restaurant meals demanded.
Excess Capacity
This term refers to a situation where a firm produces at a lower scale than its potential, indicating that there are unused resources or the firm is operating below its efficient scale.
Profit-Maximizing Level
The point of operation where a firm achieves its highest profit, determined by the intersection of marginal cost and marginal revenue.
- Interpret the concept of excess capacity prevalent in markets with monopolistic competition.
Verified Answer
SJ
Learning Objectives
- Interpret the concept of excess capacity prevalent in markets with monopolistic competition.