Management Has Decided to Add Capacity Incrementally in Smaller Chunks

question 107

Multiple Choice

Management has decided to add capacity incrementally in smaller chunks as needed, rather than purchasing one large facility. This decision ____________________.

• A) is very risky
• B) will result in low initial costs
• C) will ultimately result in lower costs per unit if demand increases rapidly
• D) positions the company to be well prepared for high demand in the future
• E) can lead to a large amount of excess capacity

---

Definitions:

Articles of Confederation

The original constitution of the 13 American states, adopted in 1781, which was eventually replaced by the U.S. Constitution in 1789.

Draft Constitution

A preliminary version of a constitution that outlines the fundamental principles and laws of a political entity that is subject to review, modification, and approval.

Shays' Rebellion

An armed uprising in Western Massachusetts and Worcester in response to a debt crisis among the citizenry and in opposition to the state government's increased efforts to collect taxes both on individuals and their trades.

Debt Relief

A measure or process through which a portion or all of someone's debt is forgiven or restructured to reduce the financial burden on the debtor.