The frequency of adding to production capacity should balance the costs of upgrading too frequently and the costs of upgrading too infrequently.Question 31Answera.FALSEb.TRUE

Explain one reason why average fixed costs change as excess capacity increases.

) The advantage of using practical capacity to allocate costs:A) is that it allows a downward demand spiral to developB) is that it focuses management's attention on managing unused capacityC) is that budgets are much easier to developD) Either A or B are correct

When resources are allocated in such a way that it is possible to increase the production of one good only by decreasing the production of another, then the allocation of resources is:Multiple choice question.efficient.inefficient.impossible.suboptimal.

When resources are , increasing the production of one good causes a decrease in the production of the other.

Fill in the Blank QuestionFill in the blank question.Production planning is important because producing too much can lead to (excess, insufficient) inventory.