If a Company Has Excess Capacity, a Sensible Bidding Strategy

question 26

True/False

If a company has excess capacity, a sensible bidding strategy is to base the bid on the incremental costs incurred because the job will contribute toward the company's profit.

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Definitions:

Externalities

Economic side effects or consequences that affect uninvolved third parties; can be either positive or negative.

Socially Optimal Price

A price point at which the social cost of producing a good or service is equal to the social benefit derived from its consumption, leading to an efficient allocation of resources.

Units

A standard measure or quantity used as a means of expressing or accounting for something, such as in production, sales, or comparison.

Pollution Permits

Licenses issued by governments that allow the holder to emit a certain amount of pollution; these can be traded in a market.