Question

What does excess capacity, at capacity, and beyond capacity mean in terms of the minimum point on the SATC?

Answer 1

Point A in the above graph represents at capacity that is at the point where the ATC is the lowest, Point B is excess capacity i.e. at that point the firm in the market can produce more and reduce the price more, point C is the point were the firm is producing more than they should as the cost is increasing and they are not efficient i.e. beyond capacity.