If Two Factories Produce the Exact Same Product Having the Same

question 139

Multiple Choice

If two factories produce the exact same product having the same costs, and factory costs are completely allocated to the individual products, the factory operating at 80% capacity (while the other operates at 100% capacity)

• A) would have a lower rate of cost allocation to each unit of production.
• B) would have a higher rate of cost allocation to each unit of production.
• C) would have the same rate of cost allocation to each unit of production as the 100% capacity operation.
• D) would be operating at a loss, because of unused capacity.

---

Definitions:

Competition

Competition refers to the rivalry between businesses or individuals for market share, customers, or resources, driving innovation and efficiency in a market economy.

Democracy

A form of governance where authority is granted to the populace, who govern either directly or via representatives chosen through fair elections.

Unions

Organizations formed by workers in various sectors aimed at defending their rights, improving working conditions, and negotiating wages and other benefits with employers.

Corporations

Business entities that are legally recognized as individual entities, separate from their owners, with the ability to own assets, borrow money, and be sued in court.