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Deterrence theory is based upon the assumption that:
Joint Cost
The costs incurred in producing products up to a split-off point in a process that yields multiple products, typically allocated among the products based on some reasonable method.
Split-off
A point in the manufacturing process where multiple products are generated from a common input.
Opportunity Cost
The potential benefit lost when choosing one alternative over another.
Excess Capacity
The amount by which current production capabilities exceed the current demand for a company's products or services.
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