Which One of the Following Factors Usually Motivates a Smaller

question 85

Multiple Choice

Which one of the following factors usually motivates a smaller capacity cushion?

• A) unevenly distributed demands
• B) high capital intensity
• C) high penalty costs for overtime usage
• D) requests for quick customer services

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Definitions:

Substitution Effect

The economic principle that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Output Effect

The Output Effect describes how changes in price levels affect the quantity of goods and services produced in an economy, influencing overall economic output.

Substitute Resources

Alternative means or materials that can be used to achieve the same function or production goal in the absence of preferred resources.

Price of Capital

The cost of using capital assets for production, including interest rates on loans or opportunity costs of using own capital.