Assuming a Firm Has Excess Capacity, Which of the Following

question 48

Multiple Choice

Assuming a firm has excess capacity, which of the following is NOT a reason that the firm would decide to reduce the normal price of a product or service in order to obtain a special order?

• A) The demand for the firm's products has dropped sharply in the last three months
• B) The firm is being offered a contract from a foreign distributor based in a country where normal selling prices are lower
• C) Market demand is strong and the firm is able to produce more products and still sell them at normal price
• D) The firm is able to sell its excess product to be retailed under a generic brand name, the product will sell at lower than normal price

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Definitions:

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