Assertion (A): There exists excess capacity of the production for the firms if these incur losses

Reasoning (R): Their production level has to remain below their economic capacity level

  • A

    Both (A) and (R) are correct but (R) is not the right explanation of (A)

  • B

    (A) is incorrect but (R) is correct

  • C

    Both (A) and (R) are correct and (R) is the right explanation of (A)

  • D

    (A) is correct but (R) is incorrect