When Considering the Purchase of a Large Central System, Such

question 6

Multiple Choice

When considering the purchase of a large central system, such as power generation or computer networks, firms have to decide how big a system to acquire and whether, and, if so, how to charge users for it subsequently. Which is true? $\begin{array}{|l|l|l|}\hline &\text { Charge } & \text { Likely consequence } \\\hline \text { a. } & \text { Done } & \begin{array}{l}\text { Firm acquires more capacity than } \\\text { needed }\end{array} \\\hline\text { b. } & \text { Full cost } & \begin{array}{l}\text { Demand for resource equals } \\\text { capacity }\end{array} \\\hline\text { c. } & \text { Depreciation } & \begin{array}{l}\text { Firm acquires less capacity than } \\\text { needed }\end{array} \\\hline \text { d. } & \begin{array}{l}\text { Depreciation } \\\text { only }\end{array} & \begin{array}{l}\text { Demand for resource equals } \\\text { capacity }\end{array} \\\hline \text { e. } & \begin{array}{l}\text { None of the } \\\text { above }\end{array} & \\\hline\end{array}$

• A)Option A
• B)Option B
• C)Option C
• D)Option D
• E)Option E

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