Which of the Following Is Not a Short-Term Decision That

question 46

Multiple Choice

Which of the following is not a short-term decision that is a reaction to excess capacity?

• A)Management makes the decision to emphasize sales in a particular market to boost poor sales.
• B)Management makes the decision to issue a rebate, offering customers a rebate of $0.50 for every widget sold, because inventory is too large.
• C)Management makes the decision to close a plant because of increased competition.
• D)Management accepts a special order at a reduced selling price since the order's relevant costs will be less than the special order's sales price.
• E)All of the above are short-term decisions that are reactions to excess capacity.

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Definitions:

Homogeneous Products

Goods that are perfect substitutes for each other; they are identical in quality, function, and appearance.

Mutual Interdependence

A situation in a market where the actions of one firm significantly impact the profitability of other firms within the same market.

Barriers to Entry

Obstacles that make it difficult for new competitors to enter a market, including high startup costs, strict regulations, or strong incumbents.

Excess Capacity

The situation where a firm or economy can produce more goods or services than currently produced, indicating under-utilization of resources.