What Is One Reason Why It Is a Bad Idea

question 107

Multiple Choice

What is one reason why it is a bad idea for a company to have excess capacity?

• A) Wastes raw materials
• B) Increases customer dissatisfaction
• C) Ties up money in extra machines
• D) Decreases form utility
• E) Slows delivery of product

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Definitions:

Base Year

A specific year chosen as a point of reference for comparing economic data, such as price levels, over time.

Inflation

The tempo at which the general price level of goods and services rises, leading to a fall in the ability to purchase.

Disinflation

A drop in the pace of inflation, showing that the rate at which prices of goods and services climb is slowing down.

Deflation

A decrease in the general price level of goods and services, often indicating a contraction in the economy.