Saturday, December 5, 2009

Excess Capacity in AP Microeconomics

Summary: Monopolistic competitors operate at an X-inefficient point on their ATC.

A restaurant seldom is packed to capacity. A hallmark characteristic of a firm in a monopolistically competitive market is excess capacity. Pizza Ranch, for example, might have several seats a table empty. A profit maximizing firm in the mono comp industry would be operating at a point on their ATC higher than a perfect competitor. This video gives a brief description of a mono comp firm with excess capacity. This blog is intended for AP Microeconomics.

About the Author: Mike Fladlien is an AP Economics teacher from Muscatine High School in Muscatine, IA. He is an author, and also publishes the Mikeroeconomics and iMacroeconomics VB blogs.


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