The Firm That Improves Its Quality Control Will Also Reduce

question 78

True/False

The firm that improves its quality control will also reduce its costs of value creation.

---

Definitions:

Firm

A business organization, such as a corporation, partnership, or sole proprietorship, engaged in commercial, industrial, or professional activities.

Profit

An excess of sales revenue relative to the opportunity cost of production. The cost component includes the opportunity cost of all resources, including those owned by the firm. Therefore, profit accrues only when the value of the good produced is greater than the value of the resources used for its production.

Loss

A deficit of sales revenue relative to the opportunity cost of production. Losses are a penalty imposed on those who produce goods even though they are valued less than the resources required for their production.

Maximum Daily Profit

The highest possible profit a business can achieve in a single day based on its operational and financial constraints.