If a Company Must Expand Capacity to Accept a Special

question 159

Multiple Choice

If a company must expand capacity to accept a special order it is likely that there will be

• A) an increase in unit variable costs.
• B) no increase in fixed costs.
• C) an increase in variable and fixed costs per unit.
• D) an increase in fixed costs.

Understand the concept of substitution effect and its impact on demand.

Comprehend how changes in prices influence consumer behavior through the substitution and income effects.

Recognize how the principle of diminishing marginal utility affects consumer choices.

Understand the role of marginal utility in determining optimal consumption decisions.

---

Definitions:

Insurance Payment

Money paid by an insurer to cover losses as specified in an insurance policy.

Agricultural Act of 2014

A comprehensive statute passed in the United States that aimed to provide a policy framework for agriculture and food, including provisions for crop insurance and subsidies.

Rent-Seeking Activity

Efforts to increase one's share of existing wealth without creating new wealth, often through manipulation of the social or political environment.

Farm Subsidies

Financial assistance provided by the government to farmers and agribusinesses to supplement their income, manage the supply of agricultural commodities, and influence the cost and supply of such goods.