Minimum average cost is referred to as the capacity of firm

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The point of minimum average cost is referred to as the capacity of the firm. Yet we draw the average cost curve extending both to the left and to the right of this point. The firm can operate below capacity, but how can a firm operate above capacity? Are there any types of firms for which it may be desirable to have a capacity below the level at which the firm may have to produce occasionally or even relatively frequently? Explain.

Reference no: EM131079642

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Minimum average cost is referred to as the capacity of firm : The point of minimum average cost is referred to as the capacity of the firm. Yet we draw the average cost curve extending both to the left and to the right of this point. The firm can operate below capacity, but how can a firm operate above capacity..

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