In the Context of Strategies for Expanding Capacity, Which of the Following

question 33

Multiple Choice

In the context of strategies for expanding capacity, which of the following statements is true of one large capacity increase

• A) This strategy aims to match capacity additions with demand as closely as possible.
• B) An advantage of using this strategy is that the fixed costs of construction and operating system setup need to be incurred only once.
• C) This strategy waits until demand has increased to a point where additional capacity is necessary.
• D) When this strategy is used, there is always excess capacity and safety capacity to meet unexpected demand from large orders is provided.

Analyze the impact of government intervention on market equilibrium, including taxes and subsidies.

Understand the marginal social cost and marginal social benefit within the context of externalities.

Describe the principles of the Coase theorem and its implications for externalities.

Distinguish between different types of taxes and their intended effects on market behavior and efficiency.