When Deciding to Add Capacity to a Factory, Which of the Following

question 7

Multiple Choice

When deciding to add capacity to a factory, which of the following need not be considered?

• A) Maintaining system balance
• B) The frequency of capacity additions
• C) Use of external capacity
• D) Immediate product demand
• E) Availability of raw materials

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Definitions:

Excise Tax

A specific tax levied on the sale of particular goods or services, such as alcohol and tobacco, usually aimed at discouraging consumption or raising revenue.

Cost Curve

A graphical representation that shows the relationship between the total cost incurred by a firm and the level of output produced.

Average Total Cost

The cost per unit of output, found by dividing the total cost (fixed plus variable) by the number of units produced.