A firm operating at full capacity will have a

Assessment: JAMB UTME - Economics - 2007 Subject: Economics

Question 1 Report

A firm operating at full capacity will have a
Answer Details
A firm operating at full capacity means that it is producing at the maximum level it can sustain in the short term. In this situation, the firm has no excess capacity to produce more output even if the price of its product increases. Hence, the supply curve of the firm will be perfectly inelastic. This means that any increase in the price of the product will not result in an increase in the quantity supplied by the firm, as it is already producing at its maximum level. Therefore, the correct answer is "perfectly inelastic supply curve."

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