When a Price Floor Is in Effect

question 273

Multiple Choice

When a price floor is in effect:

• A) demanders get too strong of a signal from suppliers about product availability.
• B) suppliers have no incentive to signal product availability to demanders.
• C) all of the suppliers' product is purchased at the lower price, so there is no need to signal anything to demanders.
• D) suppliers cannot signal their product availability to demanders.

Understand the role and advantages of flexible manufacturing systems.

Differentiate between product-focused, process-focused, and repetitive processes.

Analyze the effect of process selection on fixed and variable costs.

Understand the concept of mass customization and its implications on manufacturing and supply chains.

---

Definitions:

Entire Output

The total amount of goods or services produced by a company, industry, or country within a specific period.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, leading to a decrease in cost per unit as output increases.

Learning-by-doing

An economic concept that suggests productivity and efficiency improve through practice and the accumulation of experience.

Spreading the Overhead

The practice of distributing fixed costs over a variety of products, projects, or business units to ensure efficiency and reduce the overall cost per unit.