The Costs Incurred When Poor Quality Goods or Services Are

question 166

Multiple Choice

The costs incurred when poor quality goods or services are detected and corrected before delivery to customers are called

• A) appraisal costs.
• B) external failure costs.
• C) internal failure costs.
• D) prevention costs.

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Definitions:

Perfectly Elastic

describes a demand or supply scenario where quantity demanded or supplied changes infinitely in response to any change in price.

Efficient Level of Output

The quantity of production that maximizes the difference between total revenue and total cost, or equivalently, minimizes average total cost.

Perfect Competitor

An idealized market structure in which many firms sell identical products, entry and exit are easy, and all buyers and sellers are well-informed, leading to perfect competition.

Inelastic Demand Curve

A situation where the demand for a good or service does not significantly change with a change in its price.