If a Firm Has No Extra Capacity and a Customer

question 109

Multiple Choice

If a firm has no extra capacity and a customer asks for a special order, what price is acceptable (assuming there are no relevant qualitative factors) ?

• A) The regular price because this order replaces regular business
• B) Only variable cost
• C) Variable cost plus average fixed cost
• D) Only the average fixed cost

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Definitions:

Emotions

Complex psychological states that involve subjective experience, physiological response, and behavioral or expressive response.

Satisficing

A decision-making strategy that involves selecting an option that meets a minimum level of satisfaction, rather than optimizing outcomes.

Alternative

A distinct option or choice among multiple possibilities.

Conscious Reasoning

The deliberate use of logic and rational thinking in making decisions or solving problems, typically involving awareness and reflective thought.