What is excess capacity? What industry has excess capacity in the long run: perfect competition or monopolistic competition?
What will be an ideal response?
The efficient scale of output is the level that minimizes the average total cost. Excess capacity occurs if the firm produces less than the efficient scale. In this case, the firm could boost its output and lower its average total cost. Firms in monopolistic competition have excess capacity. Firms in perfect competition produce at the minimum of the average total cost. They produce at the efficient scale of output and so do not have excess capacity.
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The table above shows the revenue figures for the top four firms along with a total for the remaining firms in the fast-food industry. What is the four-firm concentration ratio for the industry?
A) 200 B) 20 percent C) 25 percent D) 80 percent E) 100 percent
Which of the following is equivalent to the natural rate of unemployment?
A. An unemployment rate of zero percent B. The nonaccelerating inflation rate of unemployment C. The rate of cyclical unemployment D. The underemployment rate