Under perfect competition, the industry has no excess capacity because each firm produces at its minimum point.5
Under perfect competition, the industry has no excess capacity because each firm produces at its minimum point.
- 1Long run marginal cost curvefalse
- 2Long run average cost curvetrue
- 3Long run average variable cost curvefalse
- 4Long run average income curvefalse
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Answer : 2. "Long run average cost curve"
Excess capacity in simple terms is when a firm is producing below it's full production potential. So under perfect competition, all firms produce at minimum point where the long-run average cost curve, marginal revenue, average revenue and horizontal demand curve are tangent.