Which of the Following Statements Is True Regarding Excess Capacity

question 160

Multiple Choice

Which of the following statements is true regarding excess capacity?

• A) Firms usually have excess capacity when the demand for the product is very high.
• B) Excess capacity exists because the product is extremely useful and cheap but has no competitors.
• C) If the demand of a product falls, excess capacity declines.
• D) If the demand for a firm's product is stable, then excess capacity is likely to increase.
• E) Excess capacity can be a safety net if demand suddenly picks up.

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Definitions:

Creative Expression

The process of conveying or representing an idea, emotion, or experience through imaginative skill or originality.

Social Forces

External societal factors that influence individuals' behaviors, decisions, and societal trends.

Biological Driven

Motivated or influenced strongly by biological needs or instincts.

Permanent Harm

Long-lasting damage that affects someone or something in a way that cannot easily or ever be repaired.