Shifting demand makes sense when the company has high fixed costs and low variable costs.

Question

Quizplus · Accepted Answer

Shifting demand can be an effective strategy for companies with high fixed costs as they can reduce their losses by utilizing excess capacity when demand is low. Low variable costs allow companies to produce additional units without significantly increasing their overall costs. Therefore, shifting demand can help them maintain profitability and maximize their utilization of fixed costs.

Shifting Demand Makes Sense When the Company Has High Fixed