Excess capacity refers to the:

A) amount by which actual production falls short of the minimum ATC output.
B) fact that entry barriers artificially reduce the number of firms in an industry.
C) differential between price and marginal costs that characterizes monopolistically competitive firms.
D) fact that most monopolistically competitive firms encounter diseconomies of scale.

Excess Capacity

A situation where a firm or industry has more production resources available than is necessary to produce the current level of output, often indicating inefficiency.

Minimum ATC

Minimum ATC, or minimum average total cost, is the lowest point on the average total cost curve, representing the most efficient scale of production for a firm.

Entry Barriers

Obstacles that make it difficult for new competitors to enter a market, which may include high capital requirements, brand loyalty, or regulatory policies.