Utilization Will Always Be Lower Than Efficiency Because

question 111

Multiple Choice

Utilization will always be lower than efficiency because

• A) effective capacity is less than design capacity.
• B) effective capacity is greater than design capacity.
• C) effective capacity equals design capacity.
• D) utilization and efficiency are equal in value.
• E) utilization is normally greater than efficiency.

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Definitions:

Opportunity Cost

The outcome of selecting an alternative is the exclusion of potential benefits that could have been achieved with other selections.

Equilibrium Output

The level of output at which the quantity supplied equals the quantity demanded, leading to a stable market condition without surplus or shortage.

Purely Competitive Market

A theoretical market structure characterized by an infinate number of buyers and sellers, homogeneous products, and no barriers to entry or exit.

Consumer Surplus

The distinction between what consumers are willing and able to allocate financially for a good or service, and what they actually allocate.