If a firm has excess production capacity, it
A) can serve as a safety net if demand suddenly picks up.
B) may be a sign that there's too much competition.
C) may make sense for the marketing manager to try to find new markets for current products.
D) can be costly.
E) All of these.

Question

Quizplus · Accepted Answer

All of these options are true. Excess production capacity can serve as a safety net if demand suddenly increases, it may indicate too much competition, it may be advantageous for the marketing manager to find new markets for current products, and it can be costly for the firm to maintain this excess capacity without utilizing it.

If a Firm Has Excess Production Capacity, It