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Q:

Under perfect competition, the industry has no excess capacity because each firm produces at its minimum point.

  • 1
    Long run marginal cost curve
  • 2
    Long run average cost curve
  • 3
    Long run average variable cost curve
  • 4
    Long run average income curve
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Answer : 2. "Long run average cost curve"
Explanation :

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.

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