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Monopolistic competitors operate at excess capacity to discourage new firms from going into the industry, i.e, to deter entry. Operating at excess capacity means a firm produces large quantities of goods and at lower prices. This makes it difficult for newly established firms to compete, thus ensuring that the incumbent firm maintains its monopolistic position in the market.
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What does it mean if a firm has excess capacity?
a firm has excess capacity if it produces below its efficient scale, whcih is the quantity at which total cost is a minimum.
What is excess capacity in economics and its graph?
Excess capacity is producing more than the market needs and are seen often in horizontal mergers due to supply increasing faster than the increase in demand.I can't draw a graph on here I believe, but firms expanded so that they had the capacity to produce at Qcapacity, but market demand and many firms forced the firm to produce at Q' (higher LRAC) leading to excess capacity.
Why companies engage in international business?
Companies engage in international trade to:Reach new markets and increase sales.Increase profit and revenue in order to be a stronger competitor in the domestic market.Increase diversification to offset the seasonality of certain products (eg. no one buys umbrellas in California during the Summer).Increase diversification to offset economic slumps or recessions.Put excess capacity (factories that are not being used) to use.
What are the disadvantages of monopolistic competition?
There are several potential disadvantages associated with monopolistic competition. They areSome differentiation does not create utility but generates unnecessary waste, such as excess packaging. Advertising may also be considered wasteful, though most is informative rather than persuasive.There is allocative inefficiency in both the long and short run. This is because price is above marginal cost in both cases. In the long run the firm is less allocatively inefficient, but it is still inefficient.
Assuming there is no excess capacity what is the minimum acceptable price?
It depends what you mean, buying or selling. Selling the minimum without going into the red is the break even price.
Why don't oil refineries operate at full capacity?
In the early 2000's there was almost no excess global refining capacity. The reason for the lack of excess capacity was that the industry had not added any capacity since the 70's. The lack of added capacity was due to the fact that since the 70's a huge amount of excess capacity had existed. It took almost 20 years for demand to catch up with excess capacity and the refining industry suffered low profits from the 1970's until 2002. When the demand caught up new refineries were built and they are beginning to come on line and are the reason for the increase in excess capacity. The capacity of a refinery to produce oil is increased with new innovations in the refining process and the removal of bottle necks within the system. Excess capacity is built into refineries to meet future demand. Assuming that oil refineries don't operate at full capacity to make more money and drive up prices is a false assumption. History shows that the profit margin for a refinery decreases as excess capacity increases. The global oil industry's growing challenges to increase crude production to meet demand and fill excess capacity is a much more likely source of high prices.
What does it mean if a firm has excess capacity?
a firm has excess capacity if it produces below its efficient scale, whcih is the quantity at which total cost is a minimum.
Which basic production planning strategy will build inventory and avoid the costs of excess capacity?
Which basic production strategy will build inventory and avoid the costs of excess capacity
Under which market condition do firms have excess capacity?
duopoly
Is excess a noun or adj?
The word 'excess' is both a noun and an adjective. Examples:Noun: We have an excess of twelve students over capacity for this bus.Adjective: Please call for an additional bus for the excess students.
What is mean by capacity cushion in terms of operation management?
Capacity cushion, which is an amount of capacity in excess of expected demand when there is some uncertainty about demand.
Which situation best illustrate the concept excess demand?
Currently, due to rumors of gun control legislation, there is an excess demand for high capacity magazines. You can see the results of excess demand by searching for high capacity magazines for sale. Every venue that offers them for sale has nothing in stock. Places that do have them in stock are asking extraordinary prices for them. Therefore, the example of excess demand of high capacity magazines illustrates that excess demand causes scarcity of product and inflation of price. Conversely, excess supply will likely cause decreased prices.
What is excess capacity in economics and its graph?
Excess capacity is producing more than the market needs and are seen often in horizontal mergers due to supply increasing faster than the increase in demand.I can't draw a graph on here I believe, but firms expanded so that they had the capacity to produce at Qcapacity, but market demand and many firms forced the firm to produce at Q' (higher LRAC) leading to excess capacity.
Why does the head pressure rise when the evaporator has an excess load?
the system capacity is max out
A boat may not operate in excess of idle speed within what distance of the Atlantic coastline?
100 YARDS
2001 Nissan alima engine oil capacity?
have you checked the manual yet?if not pour until it overflows then wipe excess
Why companies engage in international business?
Companies engage in international trade to:Reach new markets and increase sales.Increase profit and revenue in order to be a stronger competitor in the domestic market.Increase diversification to offset the seasonality of certain products (eg. no one buys umbrellas in California during the Summer).Increase diversification to offset economic slumps or recessions.Put excess capacity (factories that are not being used) to use.
