Figure 6.1 -A Manager Weighs Three Options for Capacity Cushion as Depicted

question 24

Multiple Choice

Figure 6.1
-A manager weighs three options for capacity cushion as depicted in Figure 1.If the dollar amounts expressed in the Figure 9.1 are costs,what is the optimal decision?

• A)large cushion
• B)medium cushion
• C)small cushion
• D)Not enough information is given to select an option.

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Definitions:

Productivity

The measure of the efficiency of production, often quantified as the ratio of outputs produced to inputs used in the production process.

Output Effect

The output effect is the impact on total revenue generated by selling an additional unit of a product or service, assuming the price remains constant.

Production Costs

The total expenses incurred in the process of creating and manufacturing a product.

Substitution Effect

The economic principle that as the price of a good increases, consumers will replace it with cheaper alternatives, whereas if the price decreases, the good will become more preferable.