Long-Term Capacity Planning Decisions Such as the Purchase of a New

question 23

Multiple Choice

Long-term capacity planning decisions such as the purchase of a new machine or construction of a new facility typically ______.

• A)call for significant outlays of capital
• B)require approval from the supervisor of each shift
• C)need to be cleared by the government
• D)can be decided only by the board of directors

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Definitions:

Profit-maximizing Firm

A business whose goal is to achieve the highest possible financial gain by adjusting production and pricing strategies based on market conditions.

Price-taker Market

A market situation where individual sellers or buyers have no influence over the price of a product, accepting the prevailing market price as given.

Marginal Cost Curve

A graphical representation showing how the cost to produce one additional unit changes as more units are produced.

Price Taker

An economic entity that does not have the market power to set the price of a good or service but must accept the market price as given.