[amp_mcq option1=”maximum physical output level” option2=”average output level over a period” option3=”break-even output and sales level” option4=”output level that equates the average and the marginal costs” correct=”option4″]<\/p>\n
The correct answer is: D. output level that equates the average and the marginal costs.<\/p>\n
Economic capacity is the level of output at which the average cost is minimized. This is the point at which the marginal cost curve intersects the average cost curve. At this point, the firm is producing the most output with the least amount of resources.<\/p>\n
Option A is incorrect because the maximum physical output level is not necessarily the most efficient level of output. A firm may be able to produce more output, but at a higher cost per unit.<\/p>\n
Option B is incorrect because the average output level over a period does not take into account the cost of production. A firm may be able to produce a certain average output level, but at a loss.<\/p>\n
Option C is incorrect because the break-even output and sales level is the point at which the firm’s revenue equals its costs. This is not necessarily the point at which the firm is producing at its economic capacity.<\/p>\n
In conclusion, the economic capacity of a plant represents its output level that equates the average and the marginal costs. This is the point at which the firm is producing the most output with the least amount of resources.<\/p>\n","protected":false},"excerpt":{"rendered":"
[amp_mcq option1=”maximum physical output level” option2=”average output level over a period” option3=”break-even output and sales level” option4=”output level that equates the average and the marginal costs” correct=”option4″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[952],"tags":[],"class_list":["post-56371","post","type-post","status-publish","format-standard","hentry","category-costing","no-featured-image-padding"],"yoast_head":"\n