As a firm's maintenance commitment increases
A) the breakdown maintenance costs increase and the preventive maintenance costs decrease.
B) both the breakdown maintenance costs and the preventive maintenance costs decrease.
C) the breakdown maintenance costs decrease and the preventive maintenance costs increase.
D) both the breakdown maintenance costs and the preventive maintenance costs increase.
E) None of the above are true.

Question

Quizplus · Accepted Answer

As a firm's maintenance commitment increases, the breakdown maintenance costs decrease because preventive maintenance helps to identify and address issues before they turn into breakdowns. However, preventive maintenance costs increase because the firm is investing more in maintenance to prevent breakdowns from occurring. Therefore, both breakdown maintenance costs and preventive maintenance costs do not decrease (option B is false), and both costs do not increase (option D is false). Option E is also false because C is a true statement.

As a Firm's Maintenance Commitment Increases