Normal Capacity and Budgeted Capacity Are Demand-Based Capacity Measurements

question 89

True/False

Normal capacity and budgeted capacity are demand-based capacity measurements.

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Definitions:

Units

Basic measurements or quantities adopted as standards to express amounts, dimensions, or capacities for various elements or substances in specific contexts.

Marginal Cost

The price rise from the production of an additional unit of a product or service.

Diminishing Returns

A principle stating that as one input in the production process is incrementally increased, there will be a point at which the added output from each additional unit of input will start to decrease.

Diseconomies of Scale

This phenomenon occurs when a firm's production costs per unit increase as it produces more, due to inefficiencies that arise from scaling up operations.