When Fixed Expenses Increase Relative to Sales, It Indicates That

question 53

True/False

When fixed expenses increase relative to sales, it indicates that there is not enough productive capacity to absorb an increase in sales.

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Definitions:

Negative Externality

An adverse effect on a third party not directly involved in a transaction, which results from economic activity without compensation.

Negative Externality

A cost suffered by a third party due to an economic transaction, without compensation.

After-Tax Equilibrium

The balance reached in the market after accounting for the effects of taxes.

Socially Optimal Quantity

The level of output or production that maximizes societal welfare, taking into account all external costs and benefits.