Which of the following is true of a firm that has reached the limit on its resources?
A)It has idle capacity.
B)Opportunity costs are now relevant.
C)It has no relevant costs.
D)It has excess capacity.

Question

Quizplus · Accepted Answer

If a firm has reached the limit on its resources, it means that it is fully utilizing all of its resources and any further production would require additional resources. This means that opportunity costs of choosing one production option over another become relevant because the resources used for one option cannot be used for another. Therefore, option B is the correct choice. The other options (A, C, and D) are not correct because they all imply that the firm has either idle or excess capacity, which is not the case if the firm has reached the limit on its resources.

Which of the Following Is True of a Firm That