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.

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Definitions:

Utility Function

A mathematical expression that represents how different combinations of goods or services create levels of happiness or satisfaction for an individual or entity.

Marginal Rate of Substitution

The rate at which a consumer is able to sacrifice a certain amount of one product for another while keeping their level of satisfaction unchanged.

Good X

A term used to represent an unspecified product or commodity in economic models and analyses.

Good Y

Refers to a hypothetical product or commodity used in economic models and theories to analyze market behaviors and consumer preferences.