Principles of Microeconomics / Unit 9 MIC 0810 short lesson, about 20 seconds
Excess Capacity
Captions available
The idea
At the tangency the firm sits left of minimum average cost, producing less than the output that makes each unit cheapest. That gap is excess capacity.
In practice
The pizza shop's cheapest output is fifty a day; it settles at thirty.
Where people slip
The witness calls it the price of variety; the anchor draws it unnamed, and the exam uses the name.
Your place on the trail
Every lesson rests on earlier ones and opens later ones. Tap any to jump.
Something wrong in this lesson? Flag it