Unformatted text preview: cess capacity, it produces a smaller output than that which minimizes average total cost.
This means consumers pay a price exceeding minimum average total cost. Excess Capacity
160 145 Price Excess capacity Profit120 maximizing output 0 50 Capacity output ATC MR
150 Quantity Efficiency and Product Innovation
Is product innovation an efficient activity? There are two views: Improved products that bring great benefits to the consumer. Many so-called improvements amount to little more than changing the appearance of a product. Monopolistic Competition P...
View Full Document