Which of the Following Statements Is True Regarding Excess Capacity

question 160

Multiple Choice

Which of the following statements is true regarding excess capacity?

• A) Firms usually have excess capacity when the demand for the product is very high.
• B) Excess capacity exists because the product is extremely useful and cheap but has no competitors.
• C) If the demand of a product falls, excess capacity declines.
• D) If the demand for a firm's product is stable, then excess capacity is likely to increase.
• E) Excess capacity can be a safety net if demand suddenly picks up.

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Definitions:

Focus Strategy

A business approach where a company concentrates its resources on entering or expanding in a narrow market or industry segment.

Financial Services

Industries and businesses that manage money, including banks, investment companies, insurance companies, and real estate firms.

Per Capita Income

The average income earned per person in a specific area or country in a specified year.

SWOT Analysis

A tool for strategic planning that helps identify the Strengths, Weaknesses, Opportunities, and Threats associated with competitive business environments or project planning scenarios.