A Capacity Cushion Is the Amount of Inventory That a Firm

question 101

True/False

A capacity cushion is the amount of inventory that a firm maintains to handle sudden increases in demand or temporary loss of production capacity.

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Definitions:

Preferences

Preferences refer to an individual's subjective tastes or desires, ranking goods or outcomes in order of choice or desirability in decision making or consumption.

Utility Function

Describes how different combinations of goods or outcomes are valued by an individual, helping to predict choice under uncertainty.

Income

The financial gain or revenue received by an individual or entity, typically through wages, investments, or business operations.

Prices

The amount of money expected, required, or given in exchange for goods or services.