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Question
Excess capacity is not found under ________.
Excess capacity is not found under ________.
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Solution
The correct option is C Perfect competition.
When the firm is producing less than what it can produce, then it is said that the firm is having an excess capacity. It means that the firm can produce more at lower cost. Whereas in case of perfect competition the firm produces at the optimum level of output where cost is minimum and there is no excess capacity.
When the firm is producing less than what it can produce, then it is said that the firm is having an excess capacity. It means that the firm can produce more at lower cost. Whereas in case of perfect competition the firm produces at the optimum level of output where cost is minimum and there is no excess capacity.
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