As Output Increases

question 271

Multiple Choice

As output increases

• A) the network effect puts downward pressure on prices while the price effect puts upward pressure on prices.
• B) the network effect puts upward pressure on prices while the price effect puts downward pressure on prices.
• C) both the network effect and the price effect put upward pressure on prices.
• D) both the network effect and the price effect put downward pressure on prices.

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Definitions:

Estimated Activity

An approximation of the level of operational or production activity expected in a certain period, typically used for budgeting and costing.

Unused Capacity

The portion of a company's production or operational potential that is not currently being utilized.

Predetermined Overhead Rate

A rate calculated before the period begins, used to allocate manufacturing overhead costs to products based on a particular activity base, such as machine-hours or labor-hours.

Automated Lathe

A CNC (Computer Numerical Control) machine tool used to shape metal, wood, or other materials by rotating it rapidly along its axis while pressing a fixed cutting or abrading tool against it.